IN a hugely significant bid to stay market relevant in a massively competitive car market, the Volkswagen Group plans to streamline its model portfolio by around 50 per cent and reduce its offering complexity by around 75 per cent by 2035.
The plans were announced by the German company’s Supervisory Board as part of its Future Plan 2030.
The Group says the prioritised models will excel in design and technology – and, importantly, benefit from the focus on fewer variants. This means higher volumes per model, lower costs, and stronger economies of scale.
The Volkswagen Group says that it will systematically tailor its platforms, electronic architectures, driver assistance systems and software to the needs of both the Western and Eastern hemispheres.
Such drastic changes are needed to shore up the Group. It’s seeing dwindling sales in China, once its greatest profit centre until it was overtaken as the number 1 by BYD, and is under attack in Europe from Chinese OEMs with an electric line up that’s been lacklustre (although the new ID. Polo and new Audi A2 may be in the vanguard of a potential renaissance).
It also launched a troublesome and massively expensive VW.os digital control platform that was supposed to rival Tesla but proved buggy, particularly on the initial ID. 3 and ID. 4 models.
By concentrating on fewer models and sharing technology across brands, Volkswagen Group will be taking a leaf out of the Chinese OEM playbook, where technology is shared across a variety of brands – think Chery Group.
Will SEAT survive Future Plan 2030?
A report in industry publication Autocar suggests that the SEAT brand will be a casualty of the rationalisation plans, the historic brand disappearing by 2035.
Currently SEAT vies with Skoda for budget brand kudos, although there are some suggestions that the sporty Cupra brand offshoot will survive.
Other reforms planned as part of the “most extensive transformation programme in the Volkswagen Group’s history” according to the company include:
- Strengthening the Group’s financial basis: The core automotive business takes centre stage. As market conditions evolve, the Volkswagen Group plans for annual sales of nine million vehicles. The primary financial target is an operating margin of nine per cent by 2030.
- Taking efficiency to the next level: A group-wide Operational Excellence programme will target higher efficiency, smoother processes, greater speed and a measurable boost in competitiveness.
- Strengthening leadership, accelerating decisions: This involves culling the leadership structures, clear accountability and shorter lines of decision making to empower teams to act faster and take greater ownership.
- Establishing a competitive production structure: This means factory closures with the Emden, Zwickau, Hanover and Neckarsulm plants fingered for closure by 2034.
- Adjusting the workforce structure: 50,000 positions – including management roles – will be cut.
- Further developing the North America and China businesses: In North America, the Volkswagen Group will focus on its most profitable segments. In China, the Group says it will adapt to revised expectations for overall growth in the Chinese automotive market and is expanding its export business toward the “Global South.”
- Simplifying the Group structure: To develop a model for an evolved decision-making and group structure for the Volkswagen Group. The Group says it will enable clear assignment of accountability and faster, more efficient, modern group governance.
- Streamlining the investment portfolio, deploying capital more effectively: The portfolio of shareholdings and businesses will be rigorously assessed to retain only those with a clear strategic and financial contribution to the core business.
More information about VW's plans for SEAT
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Ralph Morton is the leading journalist in the leasing broker sector and editor of Broker News, the website which provides information and news for BVRLA-registered leasing brokers. He also writes extensively on the fleet and leasing market in both the UK and Europe.
