Warning: count(): Parameter must be an array or an object that implements Countable in /home/bloodyca/public_html/wp-includes/post-template.php on line 284

VW said to push forward with main car-brand margin revival plan

Volkswagen CEO Martin Winterkorn - VW said to push forward with main car-brand margin revival plan

Volkswagen approved projects for adding several hundred million euros to earnings in coming years in its effort to almost triple profit margins at the namesake car brand, according to people familiar with the matter.

At an internal management meeting in Dresden, Germany, CEO Martin Winterkorn (photo above) urged executives today to act decisively amid rising competition in the auto industry, according to people at the meeting, who asked not to be identified because it was private.

The automaker is seeking to boost earnings at the VW nameplate by  €5 billion ($6.1 billion) by 2017. The effort includes capping spending increases and boosting revenue.

The company today moved to speed up decision making by reducing internal meetings and the number of attendees, the people said. A VW spokesman declined to comment on today’s meeting.

VW plans to deliver more than 10 million vehicles in 2014, reaching the milestone four years earlier than targeted. The world’s second-largest carmaker is now stepping up efforts to balance out that expansion by boosting earnings power. That’s needed as VW pledges to spend about  €17 billion a year through 2019 on new vehicles, technology and factory expansion.

The goal for the VW brand is to boost operating profit to at least 6 percent of sales by 2018 from a 2.3 percent margin in the first nine months of 2014.

The cost savings at Volkswagen’s biggest unit is part of a company wide effort to rein in spending. At VW, higher revenue from expanding the parts and service business as well as focusing on vehicles with higher margins will account for about one-third of the earnings improvement, according to an online presentation in November by Chief Financial Officer Hans Dieter Poetsch.

Lower costs from sharing more parts between models, reducing complexity of its vehicles and expanding local purchasing will contribute the remaining part of the target.