Volkswagen Group’s Finances Reportedly ‘on Fire’ Following Audi CEO Ouster
Though former Audi CEO Markus Duesmann shouldered much of the blame, it seems as if Volkswagen Group, in general, has its fair share of issues.
Times are certainly tough in the automotive industry, following years of supply chain and labor issues stemming from the pandemic, which have led to soaring demand, low supply, and various other economic problems. On top of all that, the impending shift toward electrification has proven challenging for manufactures thanks to soaring raw materials costs, regulatory and ethical sourcing concerns, and the simple fact that consumers haven’t really gravitated toward EVs as much as initially hoped. All of this helped lead to the removal of former Audi CEO Markus Duesmann just a couple of weeks ago, and now, Volkswagen CEO Thomas Schäfer has told his management team that the automaker’s finances are essentially “on fire,” according to Autocar.
During a rather fiery, hour-long meeting with around 2,000 of the company’s managers, Schäfer reportedly tasked brass with finding ways to cut expenses in a big way – to the tune of $11 billion, in fact. “We are letting the costs run too high in many areas,” he said. Schäfer also indicated that the road ahead will prove even tougher, and focused on taking the “small wins” in regards to slashing what he believes is tremendous overspending in a variety of areas.
Additionally Schäfer introduced what he calls “performance programs” that aim to shave around $11.23 billion USD in costs over the next three years. This calling to arms comes on the heels of disappointing sales in places like China – the world’s largest EV market at the moment – where automakers are currently engaged in a price war amid hefty competition. Meanwhile, VW’s CFO, Patrik Andreas Mayer, also noted that the company’s vehicle business is “unwell,” noting that its structures and processes are “too complex, slow, and inflexible.”
This desperate call to arms comes on the heels of Duesmann’s ouster just a couple of weeks ago, which came as a surprise to many when the Audi CEO was replaced by Volkswagen Group’s head of product and strategy, Gernot Döllner. Duesmann took over that role in 2019 and led the brand through some turbulent times, but VW brass was reportedly dissatisfied with Audi’s inability to keep pace with rivals like BMW and Mercedes-Benz in terms of its electric transition, along with disappointing sales results in China.
Regardless, it seems as if VG has even bigger problems to worry about, as its business – in general – is reeling at the moment. However, this phenomenon certainly isn’t exclusive to the German company, as other automakers are trying to figure out ways to reduce costs and make EVs more affordable – and viable – in the coming years, which is perhaps one of the largest challenges they’ve faced in decades, if not ever.
Photos: Audi
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