Volkswagen passenger cars brand struggles to hit cost-cutting goal, says Handelsblatt By Reuters

BERLIN (Reuters) – Volkswagen (ETR:)’s passenger cars brand is struggling to meet its 10 billion euro ($11.14 billion) cost-cutting target, undermined by issues including low sales and missing parts, German business paper Handelsblatt reported on Wednesday.

A Volkswagen spokesperson declined to comment.

The brand was 2-3 billion euros short of its savings goal for this year, two sources who declined to be named told Handelsblatt.

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

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 and scrapping a planned new 800-million-euro R&D site in its home city of Wolfsburg.

It 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.

Chief Executive 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 of the year.

($1 = 0.8976 euros)