Volkswagen to slash new-car development time to three years

The German automaker is reportedly planning to save more than $AU16.2 billion by 2026 with the introduction of a new cost-saving program.

Volkswagen is planning to save a reported €10 billion ($AU16.2 billion) by introducing a new cost-cutting program – dubbed the ‘Accelerate Forward/ Road to 6.5’ – which will see the development time of new vehicles slashed from 50 months to 36 months.

According to the German automaker, the savings initiative aims to generate a 6.5 per cent return on sales by 2026 and will see a restructure in the brand’s “administration, technical development, material costs, products, price/mix, vehicle constructions as well as sales and quality”.

Volkswagen has previously mentioned the development, design and engineering of a new vehicle normally took more than four years – and the car manufacturer claims this move was made in part to introduce new models faster into the market “without sacrificing quality or safety”.

As part of the program, Volkswagen plans to reduce the number of test vehicles during the technical development period by 50 per cent – which could potentially save the German brand approximately €400 million ($AU647.6 million)

Volkswagen management claims “workforce reduction measures” are in place during the cost-cutting initiative and will reportedly see a hiring freeze as well as partial retirement offered to employees born in 1967 or 1968, or for severely handicapped employees.

The German automaker projects the program will generate earnings of up to €4 billion ($AU6.4 billion) as early as 2024.

Other measures in the savings initiative include “improved procurement services” which the company projects to generate an annual savings of more than €320 million ($AU518.2 million) – an unspecified “enhanced after-sales business” which it claims will earn more than €250 million ($AU408 million) for the brand yearly – and further optimisation of production times allegedly saving the company more than €200 million ($AU323 million) annually.

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