With plans to give the world more of their wonders, such as the XL1, Twin Up! and Jetta, through 2018, Volkswagen has opted to shield their product spending from cost-cutting.
The German automaker plans to devote 65 percent of their overall $113 billion investment over the next four years to their line of wares and the technology behind them in all vehicle classes, both tied to their MQB modular archecture and the coming Euro 6 emissions standard.
Spending related to anything other than the above — such as construction projects for new facilities — will drop to $17.2 billion between this year and 2015, all in an effort to boost financial sustainability and profit margins.
Speaking of profits, Volkswagen aims to raise their operating margin from 3.5 to 6 percent of sales, and expects their 2013 margin to match the $15.6 million earned in 2012 when the year draws to a close.
One can only wonder on which side of the shield quality control falls.
$15.6 million? Don’t you mean Billion?
Those wheels might look nice on a big Phaeton. I like em.
I still say the “New” New Beetle is the best looking retro Porsche ever built. In trying to butch up the alleged chick car they made it look like a tribute to the 366.
Anyway… two places to not cut things in tight times would be your R&D budget and your overall product budget. If you want to succeed that is.
Companies often chop both, along with marketing, because it has no/little immediate impact on sales, but the cost reductions boost current year profits and the CEO’s bonus.
The negative impact – reduced competitiveness and market presence, leading to lower sales at reduced margins – shows up typically within a 3-5 year timeframe. Most CEOs either don’t care about issues that far in the future or figure that it will be someone else’s problem to solve.
I wonder if the part of the budget that funds rationalization and dismissing problems on its cars will be affected? Or the arrogantly defending imaginary quality department?
“MQB modular archécture” – Clearly, this is aimed at the up-scale French market.
LOLLLLL.