More profitable vehicles and fewer models with internal combustion engines: that’s the plan for Volkswagen Group in the next decade.
In an interview with Financial TimesArno Antlitz, Chief Financial Officer (CFO) of the Volkswagen Group, said the carmaker plans to reduce the number of cars in Europe using petrol and diesel engines by 60% by 2030.
Across many of its brands, the carmaker currently offers in Europe around 70 models and body style variants with an internal combustion engine (ICE).
Over the past few years, the company has invested billions and billions of euros in new models that run on electric-only architecture.
The European Commission plans to ban the sale of new cars with petrol, diesel, hybrid and plug-in hybrid powertrains by 2035. To accelerate the transition, European governments are also offering incentives on taxes and other incentives for electric vehicle buyers.
The CFO also said, “We [more focused] in terms of quality and profitability, rather than in terms of volume and market share”.
This marks a shift from the period under former CEO Martin Winterkorn between 2007 and 2015 when the automaker aggressively pursued output to become the world’s largest automaker.
Winterkorn resigned after news of the Dieselgate scandal broke out in late 2015.
Apparently the plan to put profits above current output is the result of a global shortage of semiconductors, which has prompted automakers to temporarily close factories and scale back production.
Mercedes-Benz, for example, has seen sales decline by more than 5% in 2021, but by prioritizing more expensive and more profitable models, the company recorded a record pre-tax profit. is 14 billion euros ($20 billion).
This is more than double the 6.8 billion euros ($10 billion) it earned in 2020 and the 6.2 billion euros ($9 billion) it collected in 2019.
Likewise, the Volkswagen Group has maintained stable Audi sales and Porsche growth of more than 10%. According to the business newspaper, the German company made around €20 billion ($29 billion) in pre-tax profits despite a 5.5% drop in sales to 8.6 million.
It should be noted that Volkswagen is not the first public car group to turn its attention to profit per unit rather than total sales. Groupe PSA – now part of Stellantis – has turned it around by doing this under the leadership of CEO Carlos Tavares, and Luca de Meo is hoping to do the same at Renault Group.
Antlitz notes that the automaker will not add more production capacity as Volkswagen shifts its focus to electric vehicles in Europe and other developed markets.
As with the Zwickau and Emden plants in Germany, Volkswagen will convert existing facilities from producing ICE cars to EVs.
