Volkswagen has embraced the new Accelerate Forward/ Road to 6.5 programme to improve operational efficiency and preserve the competitiveness of its brand. It intends to add several changes at different business stages to boost profit. Shorter lead times for new car development, better after-sales support, and reduced prototype production are a couple of these internal adjustments. The reduction in the new car manufacturing strategy is the most significant of these changes. The production period to construct a car has been reduced from more than 4 years to 3 years. Thomas Schafer, the CEO of Volkswagen, acknowledged that the German brand is 'no longer competitive,' which is why these actions are intended to increase its effectiveness and competitiveness in the market. The company expressed in the official press release that it hopes to reduce costs and earn an additional USD 11 billion by 2026.
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New Car Development Strategy: Some More Details
Volkswagen currently takes about 50 months to build a new car. This time frame will be shortened to 36 months with the adoption of the new vehicle development approach. According to the automaker, three years will be sufficient to introduce a new vehicle to the market without compromising its safety or quality. By the end of 2028, it will also contribute to savings of almost USD 1 billion. Additionally, the company plans to save USD 438 million annually by building 50% fewer prototypes for testing throughout the 36-month car development process.
A few more cost-cutting measures include better after-sales operations that can save up to 250 million euros a year, procurement services that can save more than 320 million euros, and other optimized production times that can save up to 200 million euros on an annual basis. All of these measures will be implemented starting in 2024.
What the Company Has to Say?
Thomas Schäfer, CEO of Volkswagen, said “With its current and future car models, the Volkswagen brand is on track with executing on this strategy. We will now strengthen our economic foundation to support our success in years to come. This will boost our efforts to make VW the world’s leading volume brand. In recent weeks we’ve made good progress in detailing the most comprehensive program the brand has ever launched. The precise contributions for all the action areas have been defined, the measures have been agreed and are already being implemented.''
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He further added ''Our efforts will in part start to bear fruit as early as 2024. This is crucial if we are to withstand the increasingly tough competition in extremely challenging market conditions. The agreement with the employee representatives is key to being able to rapidly advance on our chosen path. It is a testament to how much commitment, solidarity, and innovation are embedded in the VW brand and present our teams.”
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