VW CEO Calls For Immediate Freeze On Spending, Says “All Is At Stake”

The German brand’s head honcho warned managers of tough times.

By: Iulian Dnistran

Jul 14, 2023 at 9:16am ET

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Volkswagen brand CEO Thomas Schafer said during a recent internal meeting with the company’s managers that “the roof is on fire,” suggesting that “all is at stake” for the German carmaker as it seeks to become a leading manufacturer of EVs while also supplying global markets with internal combustion engine vehicles, according to Wards Auto.

The meeting comes after mixed results for the firm’s all-electric business. In the United States, sales of the ID.4 crossover quadrupled in the second quarter compared to last year, with 6,690 vehicles sold, while a section of the European Emden plant in Germany, specifically the one where the ID.4 is assembled, has been closed for six weeks at the end of last month due to weak demand.

With this in mind, Schafer indicated to the over 2,000 managers that the next weeks and months will be “very tough” and leaned on them to make “small wins.” He also plans to introduce a new series of so-called “performance programs” that have the goal of saving the company a massive $11.2 billion in spending over the next three years.

“We are letting the costs run too high in many areas,” VW’s CEO said, calling for an immediate freeze on spending as the brand continues to invest heavily in new EV technology and production infrastructure, Wards Auto notes.

Furthermore, sales in China have been underwhelming and the German brand has been forced to lower the price of its most profitable models to remain competitive, but that also means lower profit margins. For example, the all-electric ID.3 hatchback’s price has been slashed to just $17,500 in China, making it half as expensive as in Europe, where it starts at roughly $36,000 without tax.

“Our structures and processes are still too complex, slow, and inflexible,” Schafer added.

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The German car brand is preparing to start production of the all-new ID.7 electric sedan, as well as new generations of the gasoline-powered Tiguan and Passat models. Soon, VW also wants to launch a series of more affordable EVs that could be priced as low as $22,000 to compete with proposed offerings from rivals such as Citroen and Renault.

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