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Volkswagen Group to Cut Low-Selling Variants in Cost-Cutting Effort

Motor Trend logo Motor Trend 3/12/2015 Erick Ayapana

The Volkswagen Group today held its annual media and investor conference where CEO Martin Winterkorn revisited and solidified his company’s cost-cutting strategy. Among the key bullet points in VW Group’s plans is the announcement that it will “only offer equipment variants that reach an installation rate of more than 5 percent.” Could the manual-equipped Golf R be in trouble?


Winterkorn didn’t single out the Golf R manual headed to the U.S., though that variant has historically been a tricky proposition for VW product planners and bean counters. One model that Winterkorn did single out, however, is the two-door Euro-market Polo. Demand for that variant appears to be shrinking and VW may axe it and continue on with just the four-door Polo. Should VW follow through with this move, it claims it could save “triple-digit millions” thanks to a reduction in components and production costs. One model that’s already been confirmed to be discontinued is the EOS convertible.

Dr. Martin Winterkorn© Provided by MotorTrend Dr. Martin Winterkorn

The Volkswagen brand has set a goal to reduce its annual spending by at least $5 billion by 2017 and improve its operating profit margin to at least 6 percent. Volkswagen achieved a 2.5-percent margin last year, which is lower than the 2.9 percent it earned in 2013, Automotive News reports.

Winterkorn also confirmed a number of refreshed or new products expected to arrive soon. The refreshed North American Passat, for example, should launch by the end of this year and is expected to feature styling cues and tech from the recently launched Euro-spec Passat. The next-gen Tiguan is due next year, along with the new three-row crossover to be built in Chattanooga, Tenn.

Euro Passat© Provided by MotorTrend Euro Passat

Audi is also making drastic cutbacks. Late last year the brand’s CEO Rupert Stadler announced a financial “fitness program” that would reduce Audi’s spending by about $2.5 billion a year. Audi’s profit margin also dropped last year to 9.6 percent compared to the 10.1 percent it made the previous year. Meanwhile, Porsche’s margin of 15.8 percent in 2014 was a drop from the 18 percent it made the previous year.

Volkswagen Group to Cut Low-Selling Variants in Cost-Cutting Effort

In all, the Volkswagen Group sold 10.1 million vehicles in 2014. While the company is not immune to economic struggles in key countries like Russia and Brazil, it has seen significant growth in China where it earned over $5 billion and sold 3.7 million vehicles.

Source: VW, Automotive News (Subscription required)

2015 Volkswagen Golf R© Provided by MotorTrend 2015 Volkswagen Golf R

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