VW plans to reduce the number of Mk8 Golf variants to make it more cost-effective
The new Volkswagen Golf, that will go on sale next year, will not be available in as many variants as it is now, as the scandal-hit firm focuses on increasing profit margins, boss Herbert Diess has revealed.
VW’s operating profit margins are famously slim and dipped to 1.7% in the first half of this year. Diess has already signalled his intent to turn that around, both by renegotiating labour and supplier deals and by reducing the complexity of model line-ups.
“We need to simplify the product offering of the next Golf and have fewer variants, because we have got to get more cost-effectiveness into our company,” said Diess.
“We need to be more agile and more innovative, and this is one example.”
The current Golf is available in hatch, estate, convertible, Alltrack and SV body styles. Diess did not specify which were likely to be cut, but the recent decision to stop selling the convertible in the UK – traditionally one of the stronger markets for open-top cars – is believed to give an indication of the plan to focus on core models in future.
Diess is said to have pushed engineers and managers to reduce the expense of the MQB architecture on which the Golf sits, believing it has been over-engineered for the price points of the vehicles it underpins. It is also possible that the powertrain line-ups will be rationalised, with a greater emphasis expected on new mild hybrid 48V powertrains.
Diess’s push to raise margins is also believed to be a result of growing concerns that the firm’s £1.5 billion investment in a far-reaching electric car strategy – based around the newly developed MEB platform on which the Paris motor show ID concept was based – will put further pressure on the company’s profitabilty.
“One of the biggest hurdles we still have to take is a new deal with the unions,” said Diess. “I am looking for higher productivity and to restructure the value chain to focus on new technology. We are talking, and I hope we can have an agreed plan to have a fix in place by 2020.”
Diess is also reported to have accelerated VW’s plans to launch more SUVs, which are more profitable and have a wider global appeal than other bodystyles. This is expected to include a Polo-based Nissan Juke rival, a Golf-based SUV to sit below the Tiguan and a large seven-seater aimed at the US and Asian markets. “We will add some higher-contribution products as we prepare for 2020 onwards, when we will have a clear indication of our future,” said Diess.