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VW Focuses on Mass-Market Brands to Boost Profits
Volkswagen Group is counting on its high-volume brands and more parts sharing to bolster future profit margins over the next five years.
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Volkswagen Group is counting on its high-volume brands and more parts sharing to bolster future profit margins over the next five years.
Bloomberg News cites an presentation by Chief Financial Officer Hans Dieter Poetsch that sets profit margin targets of 6% for the VW brand, 5% for SEAT and 6%-8% for Skoda.
Last year VW posted margins of 4% and 7%, respectively. SEAT posted an operating loss of €156 million.
Currently more than half the group's profit comes from its high-end brands: Audi, Bentley and Porsche. Bloomberg says VW aims to hike the contribution of its mass-market brands in part by pushing them into new markets.
An analyst tells Bloomberg that VW's profit goals appear realistic. But he says meeting them will require "substantial" cost reductions achieved through greater component and platform sharing. VW has said it expects to cut production costs at least 20% by moving some 4 million units of annual production to its MQB flexible chassis architecture.
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