AutoBeta(AutoBeta.net)06/07 Report--

A spokesman for German automaker Volkswagen said on Saturday that Volkswagen is considering further cost cuts to cope with the impact of the new crown pneumonia epidemic, Reuters reported.

Earlier, affected by the epidemic, falling demand and supply chain disruptions, Volkswagen's factories around the world shut down and shut down almost all factories in Europe and the Americas. Herbert Diss, CEO of Volkswagen Group, said in an interview with the media that for every week of shutdown, the company would lose about 2 billion euros (16 billion yuan) in high fixed costs, an average of 286 million euros (2.28 billion yuan) per day.

Diess also said VW could tolerate plant closures in Europe and the Americas "for weeks, even months, but not indefinitely." The company is in good financial shape, but he does not rule out taking "structural measures to adjust" in the worst case if the crisis lasts months or even years.

Since the end of April, some of Volkswagen's European plants have resumed production. However, due to the continuous impact of the epidemic and the decline in market demand, the public has to face financial pressure.

At the same time, Volkswagen has previously said it is accelerating its transition from a traditional automaker to a manufacturer of new energy vehicles, autonomous driving and smart connected vehicles, a step that also requires cost cuts and efficiency gains.

In addition, the Chinese market has become the most important market for the masses. Diss said that European and American countries will suffer a severe economic recession after the epidemic, and China will be a light of hope for the masses. He praised China as "the success engine of the Volkswagen Group, now even more important than before!" At the same time, Volkswagen's brand share in China has reached 21%.

According to the 2019 financial report, Volkswagen Group's annual sales revenue was 252.6 billion euros, up 7.1% year-on-year; operating profit was 17 billion euros, up 21.8% year-on-year; operating profit excluding special project expenses was 19.3 billion euros, up 12.8% year-on-year. Return on operating sales before special items expenses was 7.6%, slightly above the target range set for FY19 and 7.3% for FY18. Expenditure on special projects includes fines and expenses for the settlement of "emissions gates" totaling 2.3 billion euros.

VW said it expects a return on group operating sales of between 6.5 and 7.5 per cent by 2020, compared with 7.6 per cent in 2019. Volkswagen explained that this depends on the turbulence of the economic environment and geopolitical tensions on the one hand, and also includes the negative impact of the outbreak of a new coronavirus on the global auto market.

In fact, cost reduction is a common practice within major brand automobile enterprises, with various measures and schemes, including personnel simplification, capacity optimization, resource sharing, reduction of vehicle series, etc. However, in the Chinese market, cost reduction often makes consumers think of "reduction", so Volkswagen's plan to "reduce costs" has been criticized by many Chinese consumers. Especially half a year ago, the collision evaluation event of "domestic Passat broken A-pillar" caused the public to fall into a serious public opinion environment.

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