The German automaker wants to shift its focus to more profitable premium vehicles
It seems more and more automakers are moving into the luxury space. Mazda, for one, has made no secret about its desire to become a fully-fledged luxury brand and is currently progressing towards the goal through its latest crop of SUVs. Now, Volkswagen Group has said that it is planning to do the same.
However, unlike its Japanese counterpart, the Volkswagen Group is taking a rather radical approach to achieve its goal and that is by axing many combustion engine models by the end of the decade. Speaking to the Financial Times newspaper, Group Chief Financial Officer Arno Antlitz said the move will allow them to concentrate on producing more profitable premium vehicles.
“The key target is not growth. We are [more focused] on quality and on margins, rather than on volume and market share,” he said.
Antlitz added that the Group would cut down its range of petrol and diesel cars by 60% in Europe over the next eight years. The range consists of at least 100 models spread across several brands under the Volkswagen Group umbrella.
According to the Financial Times, the strategy is a reflection of changes in the automotive sector, which for decades has attempted to rake in greater profits by selling more cars each year, even if doing so required heavy discounting.
Is Volkswagen Still The People’s Car?
Car companies can throw around whatever slogans or taglines they want but at the end of the day, they are in the business to make money. However, Volkswagen’s decision to move into the premium segment is a rather perplexing one as they are already capable of generating lots of profit on large number of sales thanks to the Wolfsburg factory, which is capable of producing at least 500,000 cars annually.
Without diesel, Volkswagen doesn’t really have anything that Honda and Toyota don’t already offer. Plus, entering the luxury territory means they will be facing stiff competition from the likes of Mercedes-Benz, BMW and Lexus, to name a few. Whether or not they will be able to put up a fight against these more established brands remains to be seen but it seems very unlikely.
Or this could probably be a planned and intentional failure in order to kill the Volkswagen brand in the US and just sell Audi and Porsche there. After all, the brand is pretty much dead there following the Dieselgate hullaballoo. Then, after a decade or so, they could bring Seat or Skoda to fill Volkswagen’s old spot.
