As a cost cutting exercise the second biggest global car maker VW has an ambitious plan to reduce the amount of parts it uses within its range of cars according to Bloomberg. An efficient roll out of this process can significantly improve profitability of each unit sold. These high ticket items as sold with low margins, 5 to 6%, where even the smallest of saving can make a big difference in money term. Many components are also interchangeable over its models, not only through the VW range but its sister brands too, such as Seat, Skoda and Audi. As if VW’s buying power was not big enough, reducing the part variation will also save costs. It has been suggested that future versions of the Polo may have 30% fewer components on the engine side.
Cost Cutting Excersise Already In Place
Clearly you can’t just remove components essential to the efficient running of an engine, so reading between the lines you have to assume that many a new part may be integrated together and manufactured together, rather than separate bolt on components.
Volkswagen have already started the cost cutting exercise and in recent years have successfully met budgets, so it has been quoted that this ambitious plan is “well on tracks”. Volkswagen is the largest manufacturer in Europe and is often seen as the brand that sets the standards for others to look up too. Significant investment will be needed to maintain or improve this positive reputation. This process of looking at every single component within a vehicle, to see if it is needed, or can be manufactured in a different way is only one of the cost controls in place.