The VW Group had to overcome a massive financial hurdle in the wake of the Dieselgate it inflicted upon itself and now it’s facing more costly problems due to the coronavirus pandemic. Customer demand has taken a hit in recent months across virtually all brands of the automotive conglomerate, thus significantly impacting profits. These major issues are forcing the VW Group to rethink its list of expenditures.
In an interview with Automobilwoche, a company spokesperson admitted the subject of further cost-cutting measures came up recently during an internal discussion. The German publication quotes VW’s man in charge, Herbert Diess, telling high-ranked managers within the VW Group they “must significantly cut R&D expenditure, investments, and fixed costs compared with the previous planning.”
This sounds like a decision that could very well have an impact on Audi’s agenda, less than two weeks after the announcement of the “Artemis” project to boost the development of electric cars. However, it’s important to emphasize that no final decisions have been taken at the moment of writing, so it remains to be seen how all of this plays out.
For what it’s worth, the VW spokesperson told Reuters there have been “general deliberations about what further cost measures could be taken to respond to the pandemic.” He went on to say “there are no concrete decisions yet.” It remains to be seen which brands from within the VW Group will be affected by these cost-saving measures and what measures are set to be taken.
For the time being, we only know from Automobilwoche the VW core brand will try to reduce its material overheads by as much as 20 percent. In case you’re not familiar with the term, it refers to “cost attributable to purchasing, receiving, handling, storing, and delivering materials used in assembly or production processes” per the definition in the Business Dictionary.
With so many brands under VW’s umbrella working closely together, sharing parts and assembly lines, one decision an automaker takes could have repercussions on another.