Volkswagen CEO commits to cost cuts amid China challenges

Volkswagen AG (OTC:VWAGY )'s CEO Oliver Blume has pledged to continue cost reduction efforts. While commemorating Volkswagen (ETR:VOWG_p )'s 40-year milestone in China at Tongji University in Shanghai on Tuesday, Blume emphasized the company's commitment to its "in China, for China" strategy, which focuses on local technology advancement and cost-effectiveness.

Blume acknowledged the difficulties faced by the Volkswagen group this year and outlined the company's intention to introduce over 30 new models by 2030. The aim is to revitalize the brand's appeal through a robust product lineup.

The German automaker's strategy comes as a response to China's highly competitive auto market and the swift shift towards electric vehicles that has left some foreign manufacturers, including Volkswagen and General Motors Co (NYSE:GM )., struggling to keep up.

Volkswagen's challenges in China are exacerbated by the success of domestic automakers like BYD Co (SZ:002594 )., which has contributed to the end of a period marked by strong sales and profitability for international legacy car manufacturers.

Additionally, the slowdown in demand is prompting Volkswagen to contemplate the unprecedented closure of factories in Germany, its home market.

To overcome these challenges, Volkswagen is leveraging its subsidiary, VW China Technology Co., located in Anhui province, to create a new automotive platform specifically for the Chinese market.

This platform is expected to reduce costs by 40%. Furthermore, the company aims to accelerate the time-to-market for new products by 30% starting in 2026, enhancing its ability to respond swiftly to market demands and trends in China.

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Source: Investing.com