VW To Focus On Premium Models With High Margins In International Markets

The German automotive manufacturer Volkswagen which created the world’s first “people’s car” has recently revealed that by the end of the decade, a number of its internal combustion engine models will be phased out. The company stated that it will sell fewer cars overall in order to focus on developing more profitable premium automobiles. It was also revealed by the Wolfsburg based auto giant that over the next eight years, it plans to cut its petrol and diesel car lineup in Europe by 60%, which now includes at least 100 models across numerous brands.

Arno Antlitz CFO and Member-Mgmt Board at Volkswagen AG in a recent interview with Financial Times said, “The key target is not growth, We are [more focused] on quality and on margins, rather than on volume and market share.” This new approach from the German automaker reflects the fundamental shifts in the auto industry, which has spent decades attempting to boost profits by selling more cars each year, even if doing so necessitated significant discounting.

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Martin Winterkorn, the former Volkswagen CEO who resigned in the aftermath of the diesel emissions crisis, had set a goal of beating Toyota and GM to the title of “volume number one” by 2018. However, in its quest for global domination, the Wolfsburg-based company maintained a substantial presence in unprofitable North and South American markets, flooding the area with new models while suffering significant losses.

Later on due to a severe chip shortage caused by the coronavirus pandemic, a number of carmakers including VW were compelled to reduce output last year. As a result, luxury carmakers like Mercedes and BMW were able to raise their prices and earn record profits in 2021, while selling considerably fewer automobiles. Meanwhile, a similar approach propelled VW to the top of the earnings table in Germany’s Dax index, with the automaker generating pre-tax profits of more than €20 billion. The firm prioritised higher-priced automobiles made by its Audi and Porsche brands, which provide the majority of the company’s revenues.

In other Volkswagen related news, the German automaker recently announced that its long lasted hatchback – the Polo will no longer be on sale in the Indian market. The company shared a letter on their official Twitter handle with a caption saying “Until next time, Volks!” – Polo. “Polo shared something with us that we simply couldn’t help but share it with all of you. Here is what the legendary hatchback had to say. #PoloLove #VolkswagenPolo”

Volkswagen also released a limited edition Polo named Legend Edition to commemorate the success of the Polo. This version, which is based on the top-spec GT TSI model, will be limited to 700 units. Ex-showroom, the Volkswagen Polo Legend Edition will cost Rs. 10.25 lakhs.

The Legend Edition is mechanically similar to the standard Polo and as a result, it will come equipped with a 1.0-litre three-cylinder turbocharged petrol engine that generates 110 PS and 175 Nm of peak torque. It will also only be available with a 6-speed torque converter automatic transmission.

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