Volkswagen Shortens New Car Development Time To Three Years

Volkswagen wants to have an extra €10 billion (nearly $11B) at its disposal by 2026. To get there, it's cutting costs wherever possible, and there are some major changes planned. Per the "Accelerate Forward/ Road to 6.5" program, measures will be taken at all levels of the company. As you may remember, CEO Thomas Schäfer recently said VW is "no longer competitive." Reducing expenditures could put the automaker back on track.

The first order of business will be to reduce the time it takes to develop a new car from the current 50 months to just 36. VW insists three years will be enough to bring a car to market "without sacrificing quality or safety.” This measure alone should help the company save more than €1B (almost $1B) by the end of 2028.

Another major change in the modus operandi will be represented by the assembly of far fewer test vehicles. During a car's 36-month development phase, there will be 50 percent fewer prototypes built for evaluation purposes. Again, VW says this drastic decision won't negatively impact quality. This measure is estimated to provide annual savings of €400 million ($438M).

Other measures aimed at turning VW's fortune around will include more cost-effective procurement services, improved after-sales business, and further optimized production times. These three methods are projected to generate combined annual savings of €770M ($844M).

By far the most delicate part of the massive savings plan refers to what VW calls "socially acceptable job cuts." Partial retirements will be offered to employees born in 1967 as well as to severely handicapped persons born in 1968. In addition, the existing hiring freeze and access freeze to the Tarif Plus salary group will continue. The German company intends to reduce administrative staff costs by 20 percent.

VW says these measures will begin to bear fruit next year.