VW brand said to struggle to hit cost-cutting goal

Volkswagen Group's namesake passenger cars brand is struggling to meet its €10 billion ($11.14 billion) cost-cutting target, undermined by issues including slowing sales and missing parts, a German business paper reported.

The VW brand was 2-3 billion euros short of its savings goal for this year, two sources told Handelsblatt.

Among problems faced by the brand are production shortfalls because of supply shortages of parts such as electric motors, the need to offer car buyers bigger incentives to boost demand and slowing sales of battery-electric models.

VW brand boss Thomas Schaefer is looking at more cost-cutting, especially in the areas of sales and technical development, sources told Handelsblatt. Schaefer will discuss new efficiency measures with top managers in Wolfsburg on Monday, the paper said.

VW announced details last December of the planned cost cuts that it hopes will lift the brand's return on sales to 6.5 percent by 2026, up from 2.3 percent so far this year.

Measures it listed to achieve that target included:

• Reducing administrative costs at its namesake brand by a fifth;
• Saving a billion euros by 2028 by reducing product development cycles to three years from 50 months;
• Cutting production times;
• Scrapping a planned new 800-million-euro R&D site in its home city of Wolfsburg.

VW said at the time savings of up to 4 billion euros should take effect throughout 2024.

Chief Financial Officer Arno Antlitz said at the carmaker's results conference in August that some measures would require time to take effect.

VW Group CEO Oliver Blume said at the conference that "costs, costs, costs" were the focus for the years ahead after reporting lower margins for the first half.