Autos

Volkswagen targets profit recovery as speeds transformation

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Key Points
  • "Our good performance in 2020, a year dominated by crisis, will give us momentum for accelerating our transformation," Chief Executive Herbert Diess said in a statement.
  • Chief Executive Herbert Diess told CNBC that the whole industry was facing a pivotal moment.
Bloomberg

Volkswagen is confident that cost cuts will help it raise profit margins in the coming years, the world's second-largest carmaker said on Tuesday, a day after outlining an ambitious electric mobility expansion.

Chief Executive Herbert Diess told CNBC that the whole industry was facing a pivotal moment.

"This period is probably the most crucial for the whole industry," he told CNBC's "Squawk Box Europe" on Tuesday. "Within the next 15 years we will see a total turnover of the industry. Electric cars are taking the lead and then software really becomes the core driver of the industry."

"Cars are becoming autonomous within the next 15 years so this is going to change the industry and to manage this change is probably the most important task we are facing and we think we are making good progress," he added.

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The price of electric cars on the market remains a key concern for consumers, as well as considerations over the availability of charging infrastructure. The price of Volkswagen's ID.3 electric car, unveiled in 2019, is around £32,300 ($44,707) although Diess said this was more economical when compared with a VW Golf, or other models, of a similar size.

"Electric cars already today are very, very competitive and they're becoming more competitive over time. that gives us the certainty that this is the right way going forward. Electric cars actually will bring down the cost of individual mobility further."

Earlier on Tuesday, Diess commented that VW had seen a "good performance in 2020" in a year "dominated by crisis."

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The comments come a day after Volkswagen unveiled plans to build half a dozen battery cell plants in Europe and expand infrastructure for charging electric vehicles globally, accelerating efforts to overtake Tesla.

Volkswagen said it aimed for an operating margin of 7%-8% in the years after 2021, not specifying an exact year, confirming it would end up at the upper end of a 5%-6.5% target corridor this year.

This will be achieved by 2 billion euros less fixed costs by 2023 compared with 2020, a decline of 5%, as well as a decline of 7% in materials costs over the same period, Volkswagen said.

—CNBC's Holly Ellyatt contributed to this article.