Volkswagen runs up pounds 515m loss in three months

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The Independent Online
WOLFSBURG: Volkswagen, Europe's largest car manufacturer, plunged to a DM1.25bn ( pounds 515m) loss in the first three months of 1993, prompting a savage cost-cutting programme and an extension of short-time working, writes John Eisenhammer. Volkswagen, which owns Audi, Skoda and Seat, is expecting a 20 per cent slump in its domestic market, accounting for nearly half of group sales.

Describing the predicament as an emergency, Ferdinand Piech, Volkswagen chairman, announced a halving of planned investment to DM6bn and a radical shakeup of the management.

'In just a few years we must already have overcome most of our cost disadvantages vis-a-vis the Japanese,' Mr Piech said.

Of the nine management hierarchies, six are to be axed. And by instituting a system of 'centres of excellence' VW is to put quality back at the centre of its strategy, recognition that standards have slipped considerably in recent years.

Emergency brake, page 29

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