Volkswagen AG’s namesake brand is pivoting from damage control to competing harder against Toyota Motor Corp and Tesla Inc, with a plan to increase its SUV lineup nearly tenfold and push sales of affordable electric cars.
As Volkswagen emerges from the diesel scandal, the company has intensified an overhaul at its largest division, with the aim of giving the Golf hatchback-maker more autonomy within the 12-brand group.
In the process, VW’s lineup will get bigger and more energy-efficient as it fills gaps and reviews the fate of aging classics including the Scirocco and Beetle.
“Our mission is clear: We want to make the Volkswagen brand competitive for the future,”
Herbert Diess, VW’s brand chief said at an event detailing first-quarter performance. “By 2025, we aim to play a leading role in the continuously changing automotive industry.”
VW is starting to restore profits and rein in bloated costs even as it takes a huge financial hit from the emissions crisis that erupted in September 2015.
The Wolfsburg, Germany-based automaker is bracing for a cash outflow in the “double-digit billion-euro range” this year after earmarking €2.6 billion ($24.8 billion) in total costs so far for fines, buybacks and repairs of tainted cars.
The scandal exposed weaknesses in the VW brand, which absorbed the brunt of the reputational damage.
Volkswagen last year agreed to save €3.7 billion in expenses and accelerate a restructuring that began before the crisis broke.
A key area for reform is labour costs: Volkswagen employs about 80 per cent more people than Toyota to produce roughly the same number of vehicles.
The overhaul is bearing fruit. Revenue isset to gain as much as 10 per cent this year and the operating return on sales will reach the upper end of a target range between 2.5 per cent and 3.5 per cent.
That puts the business on track to meet its margin goals of at least 4 per cent by 2020 and 6 per cent by 2025, said Arno Antlitz, the unit’s chief financial officer.
Excluding one-time items, the VW brand’s first-quarter return on sales jumped to 4.6 per cent.
“We will examine these results targets with a critical eye and raise them the moment we consider that what we have achieved is sustainable,” Antlitz said.
To spur growth, the marque is introducing seven new sport utility vehicles by 2018 and will add nine new models in China. VW expects to “significantly” reduce losses in all regions where the brand is currently in the red, by 2020.
VW says the rollout will be its biggest product offensive, with the goal of having 19 SUVs globally and selling 1 million electric vehicles annually by 2025 to become the leading maker of battery-powered autos. Bloomberg