RESOLVING THE LEDGER
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Volkswagen Group is dramatically simplifying future vehicle configurations.
The standardization push spans both volume and premium brands.
Expect far fewer choices for headlights, bumpers, seats, and wheels.
After many profitable decades, China is no longer a cash cow for legacy automakers. For several years now, virtually all Western brands have been on a slippery slope in the world's largest car market. It's not just that the gravy train has come to an end. The meteoric rise of Chinese brands is beginning to have a noticeable impact in other parts of the world as well. Last month, the likes of SAIC, BYD, and Geely reached a combined 10.9 percent share of Europe's new-car market, according to Dataforce figures cited by Automotive News Europe.
Long-established automakers are trying to fight back with a rapid influx of new models, but they know that won't be enough to satisfy executives and accountants. Drastic cost-cutting measures are necessary, and the Volkswagen Group has been the most vocal about how it plans to become a leaner, more efficient automaker. It has announced plans to effectively gut its product portfolio by eliminating up to half of its models.
As if that wasn't concerning enough, it also aims to cut the number of available options by a whopping 75 percent. In an official document prepared for investors following its half-year results, the German automotive conglomerate provides more details on how it intends to radically streamline its component variety.
Volkswagen Group components variety reduction Photo by: Volkswagen
Both Mainstream And Luxury Brands Are Impacted
BGC refers to the automakers that make up the Brand Group Core: Volkswagen, Skoda, SEAT, Cupra, and VW Commercial Vehicles. For these brands, the plan is to reduce the variety of headlight components by up to 60 percent. The Group also wants to halve the number of front bumper parts and reduce the number of seat main modules by 30 percent.
BGP is short for Brand Group Progressive and includes Audi, Bentley, and Lamborghini. The parts bin for these high-end brands will also be simplified by slashing the variety of seat components by 90 percent and reducing the number of steering wheels by 60 percent. At the same time, alloy wheel choices will be cut in half compared to current offerings.
Porsche is the sole member of the Brand Group Sport Luxury division, but it appears to be safe from such cuts. However, the situation isn't exactly rosy in Zuffenhausen. Just yesterday, the company announced plans to eliminate 5,000 jobs by 2035. Christmas bonuses will be reduced from up to 100 percent of a monthly salary to 60 percent, while further pay increases have been pushed back until 2035.
With Porsche recently selling its stake in the Bugatti Rimac joint venture, the Molsheim brand is cutting ties with the VW Group after being part of the corporate umbrella since 1998.
Volkswagen Group production capacity reduction Photo by: Volkswagen
Aside from reducing its model lineup by up to 50 percent and cutting the variety of parts by 75 percent, the VW Group is also reducing production capacity. It has already shut down the Brussels plant in Belgium, where the Audi Q8 E-Tron and Q8 Sportback E-Tron were built until 2025. The Dresden factory, once home to the Phaeton and later the ID.3, has been transformed into a technology campus.
Elsewhere, the Nanjing, Ningbo I, and Urumqi sites in China have either been shuttered or are in the process of ending operations. The VW Group is also scaling back production at six German plants and two Chinese sites: Wolfsburg, Ingolstadt, Zwickau, Neckarsulm, Emden, Hannover, Anting I, and Changchun I. These measures are reducing annual production capacity from 12 million to 10 million vehicles. However, the company says it still needs to cut another 500,000 units in Europe and another 500,000 in China to bring total annual capacity down to 9 million vehicles.
Volkswagen Group product portfolio reduction Photo by: Volkswagen
Motor1's Take: The VW Group once prided itself on offering an enormous range of models and an extensive list of options, but those days are coming to an end. Maintaining such a highly complex lineup is no longer enough to remain profitable, making deep cuts an urgent necessity as competition intensifies.
It's safe to say that online configurators will become much simpler in the years ahead, as all signs point to an unprecedented standardization drive by what was once considered an unbeatable automotive juggernaut.
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