VW to cut 60% of their models, sez Finance Chief

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From Automotive News Europe:
BERLIN -- Volkswagen Group will axe 60 percent of its combustion-powered models by the end of the decade and sell fewer cars overall to concentrate on producing more profitable premium vehicles, finance chief Arno Antlitz told the Financial Times.
"The key target is not growth," Antlitz said. "We are (more focused) on quality and on margins, rather than on volume and market share."

VW sells about 10M cars per year, right up there with Toyota and GM. But most of their overall margins are low (5 to 7%), perhaps barely profitable in the US market.
The old strategy of volume discounting just is not viable going foreward.
Hence the strategy shift from volume and market share to quality and margins.
VW has about 100 different models and will drop about 60 of them in the next 8 years.

Many differing products involves procurement and operational complexities.
 
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In the beginning of this industry there were many manufacturers. Many of them tried to compete for the same customer. We all know how that ended. Some became "boutique high end manufacturers" (think Dusenberg, Cord, Auburn) and they survived a little longer. Then came the merger or sell out of many of the independents (Maxwell, Dodge Bros, Hudson, Nash, Packard, Studebaker).....finally evolving into "The Big 3 - GM, Ford, and Chrysler".

Then the early imports starting showing up on our shores......VW, MG, Triumph, Renault, and this funky little car imported by Malcom Bricklin called the Subaru. The land of the rising Sun joined in with Toyota, Datsun, Honda, Isuzu, and Mitsu. Then a little later the Korean makes from Daewoo, Hyundai, and Kia. Yes, I know I did not mention high end makers like Mercedes, or Rolls, and Bentley but by comparison they are not "volume makers".

With this recent decision I think that VW is going to re-start the "boutique" segment again....so what is old is new again. This is partly why Stellantis may be keeping all the brands alive (for now) to see which will compete in which segments......Volume, Boutique, Specialty, and Unique.

One thing is for sure, is this industry is going to change a lot in the next decade or so, and it will be fun to watch.
 
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VW will need to change their name-guess they’re not going to be the “Volks”, or people’s, “wagen“ for much longer. Unless the Volks can all spend more $ on them!
 

JeffKeryk

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VW will need to change their name-guess they’re not going to be the “Volks”, or people’s, “wagen“ for much longer. Unless the Volks can all spend more $ on them!
Yeah, sounds like no more "People's Car". Many loyal VW fans will be upset, for sure.
Of course there is always Porsche Audi...

The problem with high volume/low margin business is you have little room to grow and innovate.
High margin/low volume, if the production models differ slightly, enables flexibility. Plus, you can always lower prices for a competitive leverage and still make money.
 
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Because people don't realize some auto makers offer a plethora of vehicles in other places on planet earth we never see in the U.S. or Canada.

 

JeffKeryk

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Because people don't realize some auto makers offer a plethora of vehicles in other places on planet earth we never see in the U.S. or Canada.

Well, the article is from Automotive News Europe. Not sure if you checked the news out ot not.
 
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Even the big wigs make serious mistakes and this IMO is one of the biggest they ever made. VW was founded on building the every mans car, Audi was their premium line so are they going to compete with their own brands?
IMO this is one of those idiots that doesn't know his *** from his elbow but no one will tell him that because of his titles.
I predict when the whole thing does go in the bucket electric sh..boxes and all this Arno Antlitz character will be working at a drive up window someplace.
 
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Because people don't realize some auto makers offer a plethora of vehicles in other places on planet earth we never see in the U.S. or Canada.

Here's my choice from the UK website.

Arteon Shooting Brake



Plug-in Hybrid available
 
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Passat, Jetta, Golf.... I assume when this is all over, we'll only have one of those remaining in the US market?
 
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VAG volkswagen auto group builds many brands + variations of them here + some overseas only. been pleased with my 2001 offerings a wolfsburg jetta i traded at almost 200 thou + a 225Q TT roadster i now enjoy, BUT although nice i dont like or buy todays very complex models
 

pbm

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One thing is for sure, is this industry is going to change a lot in the next decade or so, and it will be fun to watch.
It may (or may not) be fun to watch but I'm pretty sure it won't be fun to endure for working class Americans who are already stretched to the max on mortgages, rent, car payments etc...and our elites (in gov't and media) tell us "buy an EV" like they cost peanuts.

VW's plan to make "more profitable premium vehicles" is just another example of how out of touch the elites are with the middle class, IMO. I think VW will regret it.

PS: Whatever happened to CEOs like Henry Ford who thought cars should be for the masses?
 
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Not surprised.

Automakers with taxpayer assistance have been pouring billions of dollars in EV development and the pandemic has created an "great reset" for them with regards to their business model. IMO the reality is that with the cost of electrification it's even less profitable if not cost negative to offer models which compete with each other. I also think we're reaching peak power for drivers. Electric motors have leveled the playing field.
 
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It may (or may not) be fun to watch but I'm pretty sure it won't be fun to endure for working class Americans who are already stretched to the max on mortgages, rent, car payments etc...and our elites (in gov't and media) tell us "buy an EV" like they cost peanuts.

VW's plan to make "more profitable premium vehicles" is just another example of how out of touch the elites are with the middle class, IMO. I think VW will regret it.

PS: Whatever happened to CEOs like Henry Ford who thought cars should be for the masses?

That's nonsense.
The problem is that all workers are competing in a pool which is worldwide. Technology has allowed for the free flow of knowledge. If you want to go back to the 1950-70's just bomb the industrial base of the rest of the world like it was WW2, because during this time in US history there was no real competition.
 
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It may (or may not) be fun to watch but I'm pretty sure it won't be fun to endure for working class Americans who are already stretched to the max on mortgages, rent, car payments etc...and our elites (in gov't and media) tell us "buy an EV" like they cost peanuts.

VW's plan to make "more profitable premium vehicles" is just another example of how out of touch the elites are with the middle class, IMO. I think VW will regret it.

PS: Whatever happened to CEOs like Henry Ford who thought cars should be for the masses?
PBM,

GM is going in a different direction to focus on volume with their Partnership with Honda. Did you see this article?


This partnership is about scale. Together, Honda and GM have among the most robust manufacturing and distribution processes available and, depending on the exact terms, should be able to leverage these strengths to quickly and efficiently flood the market with EVs.
 

JeffKeryk

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Even the big wigs make serious mistakes and this IMO is one of the biggest they ever made. VW was founded on building the every mans car, Audi was their premium line so are they going to compete with their own brands?
IMO this is one of those idiots that doesn't know his *** from his elbow but no one will tell him that because of his titles.
I predict when the whole thing does go in the bucket electric sh..boxes and all this Arno Antlitz character will be working at a drive up window someplace.
I have no idea whether this will work for VW or not.
The problem is, VW has a problem; their current business model is not working for them.
The low margins (only bouyed by Porsche Audi) do not leave room for error and zero pricing leverage.
They are not making this decision lightly. Everything changes. I wish them luck.

The part that surprises me is the quality comments. I wonder what their margin warranty cost component is? In cost accounting, we learn warranty costs can make or break your margins.
 

pbm

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That's nonsense.
The problem is that all workers are competing in a pool which is worldwide. Technology has allowed for the free flow of knowledge. If you want to go back to the 1950-70's just bomb the industrial base of the rest of the world like it was WW2, because during this time in US history there was no real competition.
You do realize that America depends on China for 97% of our prescription drugs...including
antibiotics which our troops would need if we ever had a military conflict with China. When you say 'free flow of knowledge' are you referring to our universities educating our enemy (for profit)....in fact the President (in between being VP and President) was writing letters of recommendation to top universities for the children of his son's communist Chinese 'partners'. If you don't think that the middle class has been SOLD OUT by our elite class (for profit) then we can agree to disagree...
 
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