Volkswagen's To-do List: Biggest Product Push in History, Huge(ly Optimistic) Productivity Gains

Volkswagen Group’s core brand has targeted an end to profit losses in the North America by the end of the decade, setting its break-even point for 2020. Central themes of the plan are dependent on cost cutting measures and higher-margin SUV models it believes will bring it back from emissions scandal purgatory. In its most recent announcement, VW continued to tout electric vehicles as an inevitable key focus by 2025, but hasn’t lifted the veil on all that entails.

In the short term, however, Volkswagen is promising the “biggest product offensive in its history,” with ten new models coming this year alone. In actuality the number is half that, as five of those vehicles are updated versions of existing models. The real number could be even smaller if VW is counting the Atlas/Teramont as separate vehicles; the same goes for the two wheelbases of the Tiguan. And, based on the information it provided us, that does appear to be the case.

Regardless of whatever that final number ends up being, the brand’s first quarter rebound hints at a brighter future for VW. Cuts helped operating profit sweep upward to 869 million euros ($953 million) from a dismal $73 million just a year earlier — when Volkswagen was still in the darkest depths of the diesel scandal.

“Structural realignment makes the Volkswagen brand more transparent, allows better comparison of our financial indicators with those of our competitors and allows management to focus on the core activities of the brand,” explained Dr. Arno Antlitz, the Volkswagen board member for financial accountability.

“By exercising strict cost discipline, we succeeded in keeping our fixed costs at or around the previous year’s low level in the first quarter of 2017 despite the planned SUV offensive and despite the advance outlay required for our electric architecture and digital ecosystem,”

Of that push, we’ve already seen the upcoming T-Roc (sort of) and 2018 Atlas, both of which aim to fill the gaps in VW’s squandered SUV lineup. But a lot of VW’s money will come from slashing unnecessary employment and making use of its affordable and flexible MQB modular platform as much as possible. Obviously, selling more SUVs is great for business. However, despite Volkswagen leading with the promise of electric vehicle s and “new” models, what it builds won’t be nearly as important as how it builds them.

Last week, Volkswagen said it aims to increase productivity within its passenger car business by a whopping 7.5 percent for this year and the next — adding another 5 percent in both 2019 and 2020. Restructuring under its “Transform 2025+” strategy should continue throughout that period.

As for long-term product development, VW skirts the issue while promising to become the world’s market leader in e-mobility solutions by 2025. Deciding what that looks like requires a lot of guesswork, though. The company says it will produce four new electric models under the I.D. sub-brand starting in 2020. Those vehicles will use architecture derived from the I.D. concept vehicles, but VW isn’t willing to say much more than that at this juncture.

[Image: Volkswagen]