VW emissions scandal: six things the firm could cut
The hardcore Golf R400 may be considered too much of a niche product
brand-new VW CEO Matthias Müller has promised cuts; motorsport in addition to also Bugatti are likely to face scrutiny
The VW Group has set aside billions of euros to pay for its ‘dieselgate’ scandal however with financial analysts at JP Morgan predicting of which the final bill in a worst-case scenario could be 40 billion euros, of which’s little surprise of which brand-new CEO Matthias Müller has already predicted some cuts.
If of which figure is actually proven correct, of which could develop the potential to blow a hole right through the VW Group’s investment plan through to 2020; of which is actually, after all, enough to fund the design, engineering, development, launch in addition to also marketing of more than 20 brand-new designs.
Where, though, will the VW Group turn to make savings? Let’s assume of which its core product line-ups will survive; the scandal is actually unlikely to delay the Mk8 Golf or Mk6 Polo, because if anything, VW needs to focus on the bread-in addition to also-butter everyday cars of which made the brand so successful inside the first place. Its commitment to the hideously expensive process of adapting factories to the efficient MQB platform technology has to remain firm.
of which’s also hard to imagine VW pulling the plug on its American effort. Its days as a diesel pioneer there are long gone (its US website no longer features an individual diesel product) however expect of which to push ahead with local production in addition to also designs aimed at American buyers, such as the CrossBlue large SUV.
Still, there are several areas where development in addition to also spending could be slowed, reduced, postponed, or even cut altogether. Here are some likely candidates:
Budget brand: Pet projects of key executives are always easy meat when of which comes to cutbacks – in addition to also the VW Group’s much-discussed budget brand is actually a perfect example of This kind of. of which was born out of the belief of Martin Winterkorn, Ulrich Hackenberg in addition to also Heinz-Jakob Neusser of which VW could do a better job of building a budget platform than Suzuki. However, every time the bean-counters ran the numbers on what the engineers were proposing as an alternative to the Maruti architecture of which the Japanese company could offer, they said of which couldn’t stack up.
of which’s fundamentally still the case. Even if there’s still the appetite amongst VW’s Supervisory Board for yet another brand inside the portfolio – in addition to also of which’s a huge if – the Group may well decide of which right now is actually not the time to take a risk on a project with wafer-thin profit margins. Perhaps, they may reason, of which makes more sense to focus on generating money by the second generation of the Up, Mii in addition to also Citigo city cars – a project of which is actually widely judged to have been a financial failure to date.
Next-generation Phaeton: Put aside for one moment the fact of which the first Phaeton – the pet project of Ferdinand Piech – has been in red ink on the VW budget sheet for pretty much all of its 12 years (only saved in recent times by sales in China). in addition to also let’s not quibble over the fact of which the next one could probably do the same, even though of which’s due to be based on the more cost-effective MLB platform.
No, the real reason why Volkswagen won’t want to launch a brand-new luxury saloon any time soon is actually of which right right now, of which desperately needs to get back to its roots in addition to also appear humble again. The VW badge has always struggled to justify its place on a £60,000 saloon – in addition to also of which awkwardness has been compounded by the dieselgate crisis. We’d expect This kind of one to be postponed indefinitely – or even shelved altogether.
Bugatti: The idea of having €1m-plus hypercar brand in your line-up when you’re desperate to appear humble inside the eye of the wider public is actually an awkward one – in addition to also of which’s no surprise, therefore, of which the future of Bugatti has already been called into question inside the German media. In a way, of which’s a wonder of which of which’s taken so long; respected industry analysts at Bernstein Research once suggested of which the VW Group lost around £4m on every Bugatti Veyron sold.
You’d like to think of which the forthcoming Chiron may stand a better chance of bringing in some cash – if only because of which’s essentially based on the same platform, in addition to also will presumably have cost a bit less to develop. however such are the smaller numbers involved at the Bugatti plant at Molsheim of which the VW Group could easily postpone the brand-new product for a year or 18 months, keep staff ticking over with maintenance on the existing Veyrons in addition to also save a bit of PR embarrassment. Some wilder speculation has even suggested of which the Bugatti brand – complete having a near-ready Chiron – could be one of the easier elements to sell off if VW decides to break off chunks of its group.
Bugatti may not be a lost cause, though. of which may prove significant of which the brand has been brought in under the wing of Porsche inside the VW Group’s newly created ‘sport’ division. in addition to also of course, Bugatti’s biggest ally of all – Dr Ferdinand Piech – waited only one day after the departure of his arch-rival Martin Winkerkorn before popping back into VW HQ in Wolfsburg. His influence over the future of the VW Group’s pinnacle luxury brand could prove pivotal inside the weeks ahead.
Motorsport: The VW Group’s three major motorsport programmes are two World Endurance Championship campaigns for Audi in addition to also Porsche, in addition to also the globe Rally Championship with Volkswagen. Porsche remains largely untainted by the diesel gate crisis, so its WEC effort should be safe enough. Audi, meanwhile, contributes 40% of the VW Group’s revenues – so the much-rumoured switch to F1 – funded by a mix of Middle Eastern investors in addition to also Red Bull – could still occur (of which’s not likely to happen until 2018 anyway).
The WRC is actually probably under the greatest threat: VW has already won three world titles in a row with Sebastien Ogier, in addition to also while the WRC itself has listened to manufacturers in addition to also included a brand-new round in all-important China for 2016, of which has also extended the calendar to accommodate the brand-new event instead of replacing one of the less attractive rounds. More rounds mean more costs in logistics – in addition to also of which’s also worth remembering of which VW has to spend huge amounts of cash just reminding the public of which of which’s inside the WRC at all, because the series still struggles to get proper television coverage.
If VW is actually to start cutting R&D jobs in addition to also shutting a factory or two, of which’s hard to see how of which can get of which past the unions when of which is actually spending millions on three Polo WRCs. VW recently commenced testing a Polo WRC based on world rallying’s revised rules, due to come into force in 2017. Those early miles in Finland may well prove to be the limit of of which car’s activities.
Niche designs: With the Volkswagen brand’s environmental credentials under closer scrutiny than ever, is actually the globe ready for a hardcore variation of the VW Golf with 395bhp, a 0-62mph time of less than four seconds in addition to also a cost tag north of £35,000? of which’s unlikely. Prototypes of the Golf R400 spent much of This kind of year thrashing around the Nordschleife, however we’d expect This kind of most extreme of VW hot hatchbacks to be put firmly on the back burner – perhaps until of which can be an end-of-life edition of the Mk7 Golf in around 2018.
Bentley’s baby V8 sports car project – previewed by the EXP 10 Speed 6 concept at the Geneva motor show – could also be delayed. The British firm has been asking customers for expressions of interest inside the automobile, however of which may have to focus on fulfilling a bulging order book for its Bentayga SUV in addition to also wait for the cash to modify Crewe to accommodate yet another product.
Jobs: With more than half a million staff on his payroll, Matthias Müller probably gets phone calls by a dozen unions the moment he mentions the word ‘Cuts’. however there’s no doubt of which a realignment of the Group’s activities – an adjustment to its US-market ambitions, for starters, in addition to also a probable tidy-up of the Chinese operation – could result in some reductions in shift patterns at best, or factory closures at worst.
One of the bigger hits could come inside the R&D department, though. Audi’s development boss Dr Ulrich Hackenberg revealed last year of which he had 10,000 engineers under his charge at of which brand alone in addition to also of which he could tap into the collective brains of 40,000 development staff across the group. of which is actually inconceivable of which This kind of sort of scale can survive any Group-wide cuts, especially as the Group rationalises its activities in addition to also focuses on generating doubly sure of which existing products are profitable in addition to also accepted by consumers.
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