Volkswagen to make brands more unique to increase efficiency

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Volkswagen will develop its three mass-market brands more unique to lower overlaps and defuse stress within the automaking group, its CEO said on Thursday.

The automaker is aiming to make cost savings and become more effective to help fund a costly shift to electric vehicles following diesel emissions scandal.

CEO Matthias Mueller stated the Volkswagen executive board had set out a new focus for its mass-market VW, Skoda and Seat brands based upon 14 customer groups in its core European market.

“The crucial challenge is (to attain) a perfect market coverage with clear territories for the brands,” he informed a strategy meeting of about 400 managers in Wolfsburg.

“We should now have the ability to better utilize the synergies that our special alliance of brands provide than we have done to this day.”

The relocation may help to smooth relations between the brands.

VW sources informed Reuters recently that managers and unions were looking to curb competition from lower-cost stablemate Skoda, move a few of its production to Germany and make the Czech brand pay more for shared technology.

That stimulated at backlash at Skoda. Worried about the possibility of losing work to Germany, the Czech brand’s main union threatened to slash overtime work. Czech Prime Minister Bohuslav Sobotka likewise demanded talks on the concern with Skoda’s leadership.

The positioning of the brands is “an emotional theme that recently made waves,” Mueller stated.

“Of course, it is an extreme obstacle in some cases to guide this tanker and to stabilize the (different) interests,” he added.

In a next step, Volkswagen will pursue higher distinction between its premium brands and expand the strategy to other regions, Mueller stated, without being more detailed.

Apart from that, Mueller said the group anticipated to make major savings in development expenses at premium brands Audi and Porsche through their new shared PPE production platform for electric vehicles.

“On balance we expect 30 percent less workload” compared with the present MLB and MSB platforms operated independently by Audi and Porsche, the CEO stated.

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