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Volkswagen Cost-Cutting Includes Killing Off Models And Trim Levels

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So, which vehicles will be on the chopping block?

Volkswagen has announced plans to reach an operating return of at least 6% as early as 2022, which will involve cutting back on production complexity and cutting the fat from its model lineup.

VW has already streamlined its portfolio by discontinuing the three-door Golf GTI, leaving only five three-door hatchbacks for the entire US market. In Europe, the Scirocco was also discontinued and the Beetle is following suit.

As part of VW's cost-cutting measures, the German automaker will invest €11 billion (around $12.5 billion) into e-mobility, digitalization, autonomous driving, and mobility services from 2019 to 2023.

This will also include a slew of electric cars based on the company's new MEB platform. VW currently has two electric models in its lineup, though this number will expand to 20 by 2025, including two which may be built in the US.

VW's plans also include cutting down on model complexity. Currently, 60% of VW's lineup is based on the MQB platform - this share is expected to increase to 80% by 2020. By having more models based on one platform, VW will be able to significantly cut down on production costs.

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In the short-term, VW will discontinue 25% of its engine and transmission options in Europe for the next model year. It is not clear which models and trim levels will be on the chopping block but we know the discontinued variants will be chosen based on low customer demand.

Europe has historically had far more choice when it comes to VW trim levels and engines, though it seems this can no longer continue. "We are confident that we will be able to reach our target of an operating return of at least 6% in 2022, three years earlier than originally planned," VW CFO Dr. Arno Antlitz Antlitz said.

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