Volkswagen’s passenger car brand will make savings and cost-cutting moves totaling 10 billion euros ($10.83 billion) by 2026 in order to meet a target return on sales of 6.5%, according to a spokeswoman.

The business will increase manufacturing efficiency across the passenger car brand, as well as at CUPRA, Skoda, and SEAT, and streamline its product range to reach the aim, according to Chief Financial Officer Arno Antlitz’s previous Wednesday LinkedIn post.

The spokeswoman stated that not all of the 10 billion euros saved would result in better earnings and that the distribution of the funds had not yet been decided.

“The Volkswagen Group is focusing even more strongly on profitability and cash flow,” Antlitz said in his post.

Antlitz made his statement after Volkswagen brand chief Thomas Schaefer informed staff in an internal communication in mid-May that a restructure at the company’s core brand was being planned to provide it a more secure foundation.

Returns dropped to 3% in the first quarter of 2023 from 3.6% in the previous year, according to Schaefer, who cited recession risk, geopolitical unrest, shaky supply chains, and skyrocketing raw material and energy prices as the reasons.

At a capital markets day the following Wednesday, Volkswagen is expected to propose new financial goals and an updated corporate plan for the entire group.

According to a source, the carmaker’s supervisory board was scheduled to examine cost-cutting strategies for the Volkswagen, Seat, Skoda, and Cupra brands on Tuesday in order to meet that objective.

In particular, constructing its intended 25,000-euro entry-level electric vehicle in Spain would depend on maximising production efficiency, according to Antlitz’s LinkedIn post.

(Adapted from USNews.com)