Volkswagen Passenger Cars’ Cost-Cutting Initiative To Not Result In Plant Closures

In its quest to become the world’s largest automaker ahead of Toyota and General Motors, the Volkswagen Auto Group (VAG) is looking to not only grow sales and profits, but also to become more efficient by cutting, slashing and ridding itself of any extra costs. The pursuit of the latter objectives had plant workers at the Volkswagen division concerned that the cost cutting would result in plant closures. That, however, will not be the case, confirmed the automaker’s chief.

“We will not close any factories,” said VAG chairman Martin Winterkorn. “Similarly demanding goals for the other brands are coming along,” he added.

Announced in July, the cost-shedding plan involves reducing costs by €5 billion ($5.6 billion) at VAG’s core Volkswagen division by 2017 to close a profitability gap with rivals such as Toyota. Though the goal seems reasonable, it comes in spite of the brand moving forward on such questionable projects as a next-generation Volkswagen Phaeton, a move described by analysts as simply foolish given that every Volkswagen Phaeton results in a financial loss for the company.

The cost-cutting will also not affect Volkswagen-owned French supercar maker, Bugatti, which will continue to engineer and invest in an all-new hyper car, thought to be named Chiron, to replace the the ultra-exotic Veyron.

Sean is a staff writer for GM Authority and Motrolix. When's he's not busy taking in local automotive culture, he's probably detailing his car.

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