Volkswagen brand should beat five billion euro cost-cutting goal: labor chief

Thu Jan 29, 2015 10:04am EST
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By Andreas Cremer

WOLFSBURG, Germany (Reuters) - Volkswagen (VOWG_p.DE: Quote) should be able to cut costs at its troubled passenger car brand by "substantially more" than the 5 billion euros ($5.7 billion) planned by the German carmaker's top management, its works council chief said.

"With a bit more discipline one would easily be able to generate more efficiencies," Bernd Osterloh, Volkswagen's (VW) top labor representative, told reporters on Thursday at the carmaker's base in Wolfsburg, Germany.

Across the multi-brand group, the potential for savings is even bigger, he said, without elaborating.

Europe's largest automaker announced plans in July to cut 5 billion euros of costs at its core VW division by 2017 to close a profitability gap with rivals such as Toyota (7203.T: Quote).

Yet the division is working on a new version of its loss-making Phaeton saloon, which some analysts say contradicts the savings drive.

Osterloh urged management to tackle the costly proliferation of models and parts at the VW brand to raise the division's profit margin to a target of at least 6 percent by 2018 from less than 3 percent.

"I don't know why we need to have twelve different radiator grills for the Tiguan" compact SUV, he said.

Separately, Osterloh, who also sits on VW's 20-member supervisory board, said the group's new trucks chief, Andreas Renschler, had to gauge the need for possible acquisitions as he works to integrate VW's different truck units including Germany's MAN SE and Swedish manufacturer Scania.   Continued...

The Volkswagen logo is pictured  at the booth of German carmaker Volkswagen at the IAA truck show in Hanover, September 23,  2014.  REUTERS/Fabian Bimmer