By on November 28, 2015

2016_beetle_dune_5653

It’s hard not to look at the newly announced Volkswagen Beetle Dune and hear at the same time that Volkswagen will be saving $2 billion by cutting unnecessary trims and variants from their lineup.

I mean, it’s like they’re not even giving the little guy a chance.

Nonetheless, Bloomberg (via Automotive News) reported Friday that Volkswagen will axe trims and variants of its cars to reduce complexity and cost from its lineup to help pay for the company’s massive emissions scandal. Bernd Osterloh, Volkswagen’s labor chief, told journalists Friday that the company has needed to trim some of its fat for a while, apparently.

“We from the works council have long flagged the huge range of model variants and different components,” Osterloh said, according to Bloomberg. “That brings enormous complexity and adds to costs, for example, for logistics. We can take out costs there on a large scale and don’t have to talk about job cuts.”

The company is looking for ways to trim costs — rather than trimming jobs — to help pay for its emissions scandal.

In September, the company admitted that 11 million diesel cars worldwide were illegally polluting nitrogen oxides — in some cases up to 25 times the legal limit. In October, the company admitted that 800,000 cars in Europe were sold with false carbon dioxide estimates. In November, U.S. regulators notified the company that 85,000 more diesel cars in the U.S. illegally cheated through emissions.

Already, Volkswagen has set aside $8 billion to pay for the crisis so far.

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53 Comments on “Volkswagen Cutting $2B By Eliminating Trims, Editions and Probably This Too...”


  • avatar
    hreardon

    The emissions scandal has the potential to be the best opportunity Volkswagen would have had to push through other much needed streamlining of the organization. Unfortunately, what I’m reading between the lines is that they will sacrifice everything before trimming the workforce.

    • 0 avatar
      raph

      Seems like the right thing to do, why shit on your workers when the company heads made the mistake in the first place.

      I know that runs counter to everything taught at big US business schools where the imperative is to save the “job creators” at all cost but it’s nice to see a company give a damn about more than the brass and the bottom line

      • 0 avatar

        @raph

        I’m in total agreement. Treat the workers well and they are more likely to work harder, and more carefully. Treat ’em sh!tty and you’ll get what you give.

        One of the things that led post WWII to Toyota becoming a quality leader was that the occupying forces (us) wouldn’t let them fire workers. So they made the workers valuable.

        • 0 avatar
          RideHeight

          “Treat the workers well and they are more likely to work harder, and more carefully.”

          Some will, others will do even less and howl for more. “Workers” are no more an undifferentiated mass than are “all them n*****s”.

          I suspect your conception of “workers” comes rather more from reportage than from immersion.

          • 0 avatar
            dantes_inferno

            @RideHeight: Some will, others will do even less and howl for more. “Workers” are no more an undifferentiated mass than are “all them n*****s”.

            I had no idea this site had morphed into “The Truth About Stormfront”. Who knew?

          • 0 avatar
            RideHeight

            God, not another BAFO.

            Jumping into an English language thread is best done by those who can comprehend simple sentences in that language.

    • 0 avatar
      Big Al from Oz

      Hreardon,
      I have been thinking along the same lines as your commnet for a while now.

      To every negative there is a positive.

      The positive is a leaner, stronger VAG is the future.

      • 0 avatar
        NickS

        I would normally agree with these two comments but something about this is making me less hopeful than I normally am.

        VAG needs a very experienced outsider at the top and lots of outside talent to infiltrate the ranks and instill new ways of thinking. It needs a new mentality, and newer management structures. I have been shaking my head at their long term strategy that shunned anything but IC engines. It was a very desperate act to try to gain CAFE credits with a diesel engine that cheated. If they had done it cleanly I would applaud. And to ignore the strategy of top seller Toyota is indicative of hubris.

        And it’s not like they were able to accomplish much in the US market anyway. Sure, they created a small diesel segment where none existed here, but even at that, how many vehicles were they able to sell all these years? Less than half a million.

        • 0 avatar
          hreardon

          NickS –

          Not sure I agree with that statement in its entirety. I think VW’s electrification program, especially once Hackenberg was told to put his foot down, is on the right path, especially over at Audi. The non-diesel engine programs are solid.

          The issue with the diesels boils down to a corporate culture issue: the engineering teams couldn’t meet the new compliance mandates or management mandates and saw only one way out: cheating. One has to ask why engineers and managers found it more acceptable to tempt government regulators than to tell the executives at Volkswagen that they couldn’t meet the timelines and rules.

          When you don’t give people the opportunity or space to question, push back and disagree without fear of retribution, this is what you get.

          • 0 avatar
            NickS

            hreardon, no doubt, I wasn’t referring to their spark ignition programs. My point was, what was VAGs electrification program *all these years* that TMC and others put batteries and windings on anything they could, to get some cafe credits? One big loud nothing. The etron will be a very nice offering after a refresh or two, but we are talking a near 20 year headstart for their supposed #1 competitor (you know, the one they set their sights on knocking down to #2).

            Their competitors went to town with it, scoring cafe standards by electrifying their popular offerings, carved out their own market in vehicle sales, and locked in suppliers (batteries!). And they have a solid reputation in hybrids and electrics with the larger buying public.

            Can VAG make up in lost ground, in R&D, and in sales numbers? Sure, in theory, yes. Will everyone else including Toyota give up their market share willingly? Can VAG capture more market share without giving up too much of the sub 10% margin typical in the automaker industry? All open to debate.

            Being a VAG fan, I hope they play it really smart with the e-tron, and offer irresistible warranties and other basics for an attractive price. They are putting some really nice tech on it, and I am talking about the mechanicals, not the bluetooth and integration “lipstick”.

            I don’t see where we differ on the corporate culture aspects, unless you mean that the disfunction exists only on their diesel division. The way I see it, it is an organization-wide issue, and fixing it will require major injection of outside minds. That is a drastic change for the type of organization they are.

  • avatar
    blueflame6

    You know they’re not serious because Bugatti still lives.

    • 0 avatar
      Robert.Walter

      Regardless of the already sunk costs of development, when you lose money on each one, the way VW does, cancelling outright and writing off the dev costs would likely be a net save.

      Besides I find it hard to believe that Bugatti ever sold any additional VW products.

      Like the Phaeton, it’s a Tour de force of VW engineering capability, but more or less a pet wet dream of a talented and tech geil patriarch.

      • 0 avatar
        hreardon

        You’re not wrong in that, Robert, but to a certain extent brands like Bugatti and Lamborghini, along with motorsport programs are research and development programs. The goal, of course, is to bring some of that high end technology downmarket. Additionally, it’s a way to attract some of the brighter minds in the industry to your company with these kinds of programs.

        The battle for really good talent is intense, especially at the top end of the market. There are engineers out there who would give their left you know what to go work on Porsche, Lambo or Bugatti skunkworks projects. If VW doesn’t have anything for them, Daimler or BMW will.

        Not that this is the driving reason to keep the programs going, but I say this to point out that it’s not completely cut-and-dry as saying “they lose money, cut them.”

        Volkswagen is going to have a *serious* brain drain after ‘the purge’ is over. Frankly, I think that the pain they’re going to feel from that will have far greater long term repercussions for the company than the temporary sales slump.

  • avatar
    hreardon

    I don’t think Bugatti is going to go anywhere. The next model is already baked in and ready to roll, so the costs are already assumed. I suspect we’ll see a longer model cycle, but it’s a good halo for Volkswagen.

    Outside of trucks (MAN/Scania), I think we’ll end up with models being axed, trim levels eliminated and longer product cycles than originally planned. Again, I bet that a lot of these cuts were already in the works/planning phases and they’ve just been waiting for an incontrovertible excuse:

    A few easy initial cuts:

    1. Beetle
    2. Scirocco
    3. A3 3-door (already rumored to be discontinued at the refresh next year)
    4. Polo 3-door (already rumored to be discontinued)
    5. CC
    6. Phaeton

    I don’t really see the CC going away because that’s another one that’s far along in the planning stages where it wouldn’t really make sense to axe it now, especially with the MQB architecture being what it is. The word on the street for about a year now is that Audi will eliminate the A3 three door variants. Phaeton, we already know, will be delayed.

    I also suspect we’ll start seeing a good number of powertrain combinations eliminated. In the US market I think that the nail is in the coffin of diesel and even if VW gets certification to sell the 2016 models, they’ve already recalibrated the production models to significantly minimize the number of diesels brought to market. The smart move in the US will be to speed up electrification and hybrids and just forget about diesel altogether.

    • 0 avatar
      seth1065

      I am not sure VW will give up on oil burners in the US, if they ever get the green light to sell them again, most diesel buyers are pretty loyal to the benefits of diesels, very good mileage, long range on one tank and toque so vw has a built in set of buyers, who really have very little options out there in the price range VW sell the cards at. The share of diesels may shrink to 15% from the 20 it is now but VW will need every sale they can get so diesels may stay, I have no idea what it cost to get them here and certified in the future but the fact is most diesel buyers will not buy another VW product so they would be lost sales and I am sure the dealers would not be happy with that and they are VW real customers.

      • 0 avatar
        hreardon

        Don’t disagree with that assessment, seth1065, but I think that the writing has been on the wall for a while now that the days of diesel are ending. Gas powered plants are getting very efficient and with the upcoming gas/electric hybrids you’ll start seeing mileage figures that come close to and eventually surpass diesel without all of the emissions, compliance, complexity, etc.

        The A3 e-tron, due any day now, is the first (stateside) example of this from VAG. Combine a 1.4TFSI with electrification for 39mpg average and it’s a pretty solid start. Audi is pushing for “e-quattro” in upcoming models which eliminates the driveshaft and puts electric motors at the rear with the front being gas powered.

        I think that with a combination of cleaner burning gasoline engines, improved battery/electrification and weight reduction programs along with manufacturers looking to simplify their drivetrain options to reduce costs – diesel is not long for this world in the mass passenger car market.

    • 0 avatar
      Big Al from Oz

      VW can expand also. The Amarok comes to mind. This could be a real value addition if larger numbers were sold, especially in the NA market.

      The Amarok is a better pickup than the Colorado/Canayon and Taco.

      It will also appeal to many who aren’t pickup people as well. Even here in Australia an Amarok driver is not looked upon as a redneck/bogan stereo type.

  • avatar

    Translation: So long fully load variants with available manual transmissions.

    For me, this has been a hallmark of VW. I can get a fully loaded Golf/Golf wagon/CC with a stick. And I mean absolutely optioned to the top. That’s fantastic, and one of primary reasons I would choose VW (it certainly not because I respect them as a company, or have heard tails of excellent reliability and service).

    In other words, this could also end up being the last straw for North American VW fans. That said, I still haven’t put my money were my mouth was (well, since 2008 when I told the loaded Jetta TDI 5-speed I had), so maybe my perspective is irrelevant to them.

    • 0 avatar
      Kyree S. Williams

      Only the TDI on the wagon, which isn’t available at this time. I have a Golf SportWagen TDI SEL, which was available with both the 6MT and the DSG. Mine has the DSG. But on the 1.8-liter TSI, the Golf SportWagen can only be had with a stick in base S guise…and a 5-speed at that.

    • 0 avatar
      darex

      You’re mistaken. You cannot buy a loaded Mark VII Golf with stick, unless you get a GTI Autobahn version. I tried to option up a Golf with stick, and got pissed off and frustrated at VW for not letting me get what I wanted without compromises, so I got an F56 MINI Cooper instead, because at MINI, you can get the car exactly the way you want it.

      Not sorry either. I got a better car, which I love to this day (pre-dieselgate, and especially in light of it).

      • 0 avatar
        dantes_inferno

        @darex: so I got an F56 MINI Cooper instead, because at MINI, you can get the car exactly the way you want it.

        Along with the BMW (Break My Wallet) experience after the warranty expires.

      • 0 avatar
        getfast

        “Better car” was not my opinion of that MINI when I drove one compared to the mk7 GTI (with a stick) that I ended up buying. But to each his or her own I suppose. Agree with you about the ordering though

      • 0 avatar

        I’m not mistaken, it depends on the country in which you live.

        In Canada, you can get all of the Golfs and Golf Sportwagens loaded with a stick. Highline with every single one of the options clicked and a 6-speed? Sure, no problem. No limitation on colours either.

  • avatar
    APaGttH

    The Trade Guild will be very upset about this. Arrakis needs these Beetles for increased spice production.

  • avatar
    joeveto3

    This is a an opportunity for VW to get back to basics.

    Yes, eliminate useless models/brands. Phaeton, CC, etc. If they don’t make money, or have market relevance, they are gone.

    Use this as an opportunity to focus on (and possibly repair, re-imagine) the VW brand.

    I’d look at bringing the Polo (and a Polo GTI) to the U.S.

    Offer longer warranties to build faith in the product (and make a product that doesn’t need a longer warranty, the way the Koreans do).

    They need competitive crossovers. Because people want them.

    So if I was King of VW, we’d have a Polo, Golf/Jetta, Passat, Tiguan, and Toureg with 7 passenger capacity. All with minimum 7-year 100K powertrain warranties, 5/60K bumper-to-bumper.

    And if things went well…I’d bring the Scirocco back.

    • 0 avatar
      Kyree S. Williams

      I don’t think VW could produce the Touareg cheaply enough to make it competitive in the mainstream 7-passenger arena. The hardware and structure are too exotic. At the same time, it’s not a serious enough luxury car that they could raise the price and increase profits that way. The first Touareg was real luxury, but the current one has obvious signs of cost-cutting (likely in order to make the Cayenne and Q7 look better), and I doubt that will change.

      What VW needs to do is use the NMS Passat architecture to build a truly-accommodating seven-passenger SUV. But I think the brand is actually making a long-wheelbase version of the next Tiguan that can actually seat seven people. I fail to see how it will be competitive since it’s on a small-car architecture and therefore quite narrow (whereas most large seven-seat crossovers are scaled-up versions of mid-sized cars).

      • 0 avatar
        hreardon

        Kyree –

        New Tig is MQB, upon which the Euro Passat and Golf are based. No reason they can’t scale up the track or wheelbase for the US market.

      • 0 avatar
        derekson

        VW already has a midsize 7 seater crossover in the works based on MQB. That is why the Tennessee plant is being expanded to build. The next generation Touareg will also likely have 3 rows, like its Q7 brother.

        This is in addition to the LWB Tiguan they are planning to sell in the US and China (which will probably be more like the Discovery Sport as a 5+2 seated rather than a true 7 seater given its size).

    • 0 avatar
      Varezhka

      I doubt VW can afford to offer longer warranties unless they’re trimming their product line to only stripped out Golfs and Jettas with the old 2.5L inline-5. They already have one of the highest warranty spend of all brands, and that’s with their reputation for declining warranty fixes.

  • avatar
    wmba

    Osterloh wants to cut trim lines and models yet maintain labour employment. Seems like a disconnect to me.

  • avatar
    HerrKaLeun

    I think yesterday I read they have 180 different steering wheels (and not sure if it was just for the Golf). I don’t recall the source…

    The problem is they develop too many things, which is expensive, and those are developed half-ass. they sell a few cars here with 7 different engines and each with 2-3 transmission options. what all these engines and transmissions have in common is that they are unreliable and expensive to maintain. the opposite to Honda, use few engines, but make them really good.

    That is why people in Europe (who factory order new cars) wait for 4-6 months for their car. Too many options. Every time when I’m back in Germany friends tell me “my car is supposed to arrive in 6 months…”. what are you getting, a Rolls Royce or a Ferrari? No, just a friggin Golf TDi with 100 hp and heated seats.

    • 0 avatar
      hreardon

      Keep in mind, HerrKaLeun, that part of the reason for ordering is the Euro-delivery system where there isn’t as much room (or cheap financing) to keep massive quantities of cars on dealership lots.

      Additionally, never discount the power of government incentives and regulations for the bevy of various engine options. Since Eurobuyers pay a CO2 tax as well, manufacturers have to offer a large range of powertrains to fit everyones’ budgets.

      Wouldn’t disagree with the comments about too many options, but I have to imagine that there is someone in the finance department who has done the math and determined that those options are in reality profitable. I’m one who believes in simplicity of options/logistics, but then again….I ain’t that good with the ‘arithmetic.

  • avatar
    eggsalad

    What if they stripped down the line to a single, air-cooled, rear-engined, RWD car?

    Oh wait, they tried that already.

  • avatar
    Joss

    It hasn’t played out yet. But do you think in forty years dieselgate will seem like Watergate – a storm in a teacup?
    You know, that the competition just drag out and dust off every once-in-while to denounce that side?

    In NA they could: Bsse Golf 3 or 5 auto or manual.
    GTI & R 3dr manual.

    • 0 avatar
      geozinger

      (Puts on history nerd hat) Watergate was an incredibly significant time in the 20th Century US politics. It lead to the downfall of a sitting US president, arguably the most powerful man in the world at that time. (takes off nerd hat)

      But, I get your reference. And yes, I believe you’re going to be correct. Just like 45 years after the Vega, 35 after the X cars for GM, there will be people (who never have driven these cars much less owned one) who complain about how bad they were. In 10, 15, 20 years there will also be people who will remark about how they *knew* VW diesels were gross polluters, etc., etc…

      I’m no VW lover nor hater either, I’m mostly “meh” about their North American offerings. But once that meme gets established, it will be difficult to change public opinion. Reference these names: Edsel, Vega, Pinto, Volare, Corvair… You get the idea.

      Part of my interest in all of this is that how big is the diesel car market in the US? Maybe 5%? It’s remarkable to see the media frenzy around this issue, as I consider this a engineering compliance issue, not a life and death issue as the “runaway” Toyotas or the “Russian roulette” ignition in GM cars of the last decade.

  • avatar
    namstrap

    The VW Up! small car for Europe was originally designed to have a rear engine. The FWD parts bin was cheaper and handier, so it became like a small Golf or small Polo. It has won awards over there.

    • 0 avatar
      Kyree S. Williams

      Shame that it wasn’t rear-engined. The only rear-engined cars I can think of are the 911 and the Smart Fortwo. That definition expands a little bit if you consider electric cars like the Model S and the BMW i-Series, but we could still use more rear-engined cars.

  • avatar
    Jeff S

    I don’t think bringing over the Amarok will save VW in America. VW needs a good crossover and much better reliability otherwise they are wasting resources.

    • 0 avatar
      RobertRyan

      @Jeff S,
      It does not make much of a dent in the bottom line for VW here. There Commercial vehicles may though

      • 0 avatar
        Big Al from Oz

        RobertRyan,
        I do believe the VW US could benefit with a better lineup of their commercials.

        The Amarok does pose a problem……..the uncompetitive chicken tax.

        For VW to get a foothold in the US pickup market imported pickups are a must. VW does have gasoline engines suitable for the Amarok as well.

        With VAGs current “cash flow” issues I don’t see VW spending billions on a pickup manufacturing facility and hoping to sell 100 000 Amaroks a year to make it viable.

        This is sad. I suppose this is what is termed freedom of choice and trade by some who comment on TTAC.

        • 0 avatar
          DenverMike

          VW selected the lineup, best suited for the US market. That’s no Scirocco, no Gol, no Caddy and no Amarok. No US conspiracy necessary.

          Each one missing would cannibalize the existing VW lineup. It makes zero sense to throw everything they have at every market. They’d end up spinning their wheels for far less revenue.

          With the Amarok’s lack of low-range 4X4, it’d be squarely against the Honda Ridgeline, for those specifically looking for a midsize pickup.

          It’s still a shame for anyone obsessed with getting a VW pickup, but what about those that dream of a VW Gol?????? THE HUMANITY!!!!!!!!!!!

    • 0 avatar
      Kyree S. Williams

      Not even better reliability, so much. In my experiences, which include Internet marketing for a VW dealership and being a three-time VW owner, most people don’t even know enough about cars to even be wary of VW’s reputation. It’s just that VW’s cars can appear a bit threadbare and overpriced compared to those of competitors…and that may turn quite a few buyers off. VW could stand to add a bit more pizzaz and features to its cars. The Golf, for example, should be available with blind-spot monitoring.

      • 0 avatar
        derekson

        You can get blind spot monitoring in the Driver Assistance Package in 2016 Golfs and Golf Sportwagens. It’s available on SE and SEL models and includes adaptive cruise, automated park assist, blind spot monitoring, etc. It’s really not too bad at $1500 for all of these tech features either, and many of those aren’t available in other cars of this size/price class.

  • avatar
    Jeff S

    @Robert Ryan–I don’t have any problem with VW selling the Amarok but I don’t think the incremental amount of sales from the Amarok is enough to save VW in America. VW needs to offer some more crossover models in subcompact, compact, and mid size.

    @Kyree–You would know about that more than I would but the few VW owners I know are plagued with electrical problems especially electric windows. Usually those that own the TDIs like the engines but they are plagued with a host of other problems that you do not see typically in a Toyota, Honda, Kia, or Hyundai. German cars do not have the best reputation for electrical problems. I have a nephew that works in a BMW dealership that says that the new models have many electrical and computer problems. You are correct in that the VWs are not as competitive in price as the competition. VW could take a page from Hyundai and Kia in adding a little more piazza to their vehicles. The also could use some competitive crossovers to appeal the the CRV, RAV 4, Escape, Equinox, and Encore customers. Another compact and midsize sedan will not be enough in an already crowded field of like vehicles.

    • 0 avatar
      Whatnext

      That’s strange. I’m a first time VW owner and haven’t been plagued by a host of anything. The fuel guage went tit’s up but in 4 years I don’t consider that a “plague”.

      • 0 avatar
        DenverMike

        You should play the lottery.

      • 0 avatar
        lon888

        Let’s see in the 4 years I’ve owned my brand new 2012 GTI I’ve had to replace the fuel pump ($650), the intake manifold (warranty repair), 3 sets of rear anti-roll bar links ($50 a set). Add in the synthetic oil, premium gas, special brake fluid and special coolant you’ve got a car that can be expensive to own.

        • 0 avatar
          dantes_inferno

          >Let’s see in the 4 years I’ve owned my brand new 2012 GTI I’ve had to replace the fuel pump ($650), the intake manifold (warranty repair), 3 sets of rear anti-roll bar links ($50 a set). Add in the synthetic oil, premium gas, special brake fluid and special coolant you’ve got a car that can be expensive to own.

          Precisely why I decided to restore my 1997 Jetta by adding a 1997 Audi 1.8T with forged internals, with PORT injection, K04 turbo (google BFI Mk3 1.8T conversion) and Integrated Engineering’s ALUMINUM intake manifold – all on a chassis in the 2500 lb range – simplicity. Especially in light of the “marvels” of the direct injected engine on lon888’s 2012 GTI:

          High-pressure fuel pump ($650)
          Plastic Intake Manifold (under warranty)
          and possible walnut shell blasting of the intake ports/valves to remove excessive carbon (to name a few).

          The greater the complexity, the more components that could possibly fail.

          No thanks.

      • 0 avatar
        VoGo

        Next time you change the oil, trying adding some piazza – like Hyundai and Kia do.

  • avatar
    CoreyDL

    I propose we extend the words “trims and variants” to include the CC and the Tiguan, and the Eos.

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