VW’s New Strategy Due This Week

Volkswagen AG is expected to present a new business strategy on Thursday that focuses on broadening the company’s lineup of electrified cars, expanding into ride-hailing services and reducing costs without cutting jobs in Germany.

CEO Matthias Mueller’s “Strategy 2025” is a response primarily to inefficiencies within VW’s namesake passenger car operations. Labor costs for the division have zoomed 90% to €36 billion over the past six years, and the unit’s operating margin shrank to 0.3% in the first quarter of 2016, notes the Financial Times.

Last week the company reiterated the need to increase productivity. But FT says efforts to lower costs will be tempered by demands from VW’s powerful works council to shield jobs. 

Analysts tell the London-based newspaper they doubt Mueller’s new strategy will address another major issue: corporate governance. The issue was highlighted last September by the company’s ever-expanding diesel emission scandal. Critics say the supervisory board either knew about the cheating and thus is complicit, or didn’t know about it and therefore is incompetent.

Minority investors have been clamoring for years to add more outsiders to VW’s insular supervisory board. Many thought the diesel crisis would trigger action. But a company spokesperson tells FT, “We will not have a big change” in the board.