The Volkswagen Group is aiming for an improvement in earnings of several billion euros with the promised austerity program of its low-yield core brand VW passenger cars. The Wolfsburg brand with the VW logo wants to improve earnings by a total of ten billion euros by 2026, as the company announced on Wednesday. The operating margin should thus increase to 6.5 percent in order to secure future investments and employment, as it was said.
Brand boss Thomas Schäfer had already announced that he wanted to trim the brand back to higher returns after a weak first quarter. At a works meeting, he announced that he wanted to streamline and accelerate administrative processes and increase efficiency in development and production. VW customers also have to adjust to a smaller model range and fewer equipment variants. At the same time, the Wolfsburg want to increase their product quality again.
Return on sales should be increased
The program should be implemented in coordination with the employee representatives, and the specific measures should be worked out by October. “The program has top priority for the entire board,” CEO Schäfer was quoted as saying in the company statement. About a month ago, in an internal letter, he described the return on sales of 6.5 percent as necessary in order to “really be crisis-proof”.
In the first quarter, the car company’s core brand had only brought in a return on sales of 3 percent – of 100 euros in sales, only 3 euros in operating profit remained in day-to-day business. “We simply cannot afford important investments in the future,” said Schäfer, commenting on this result. With Stephan Wöllenstein, the company is assuming responsibility for the program as an experienced international manager.
Chairwoman of the works council calls for a clear target image
At the employee meeting, the Management Board and employee representatives emphasized their team spirit and common goals. At least that was the message of the corporate statement. In her speech, Daniela Cavallo, chairwoman of the works council, also made it clear, according to the manuscript, that group management is a real long-running issue – even among former group bosses. “At this point we have to finally get to a state that is characterized by clear guidelines, calm, consistency and reliability,” Cavallo demanded.
She expects a clear target from the management team and also announced that she would intervene if she felt this was necessary. Above all, she shared the view on the necessary improvement in quality. Recently, one has become more arbitrary at this important point, she said. Even if the group’s plans did not contain any corresponding signals for the workforce, Cavallo emphasized that collective bargaining cuts or cuts in job security are not an option.
After the group’s annual general meeting in May had been accompanied by criticism, blockades and protests, activists also blocked the main entrance to the Volkswagen plant on Wednesday. Among other things, the demonstrators hung themselves over the streets with the help of taut ropes and asked employees to stop their work, at least for a short time. “The production and supply of the main plant are currently not affected by the campaign,” the company said in the afternoon.
