According to the Volkswagen Group (VWG), despite its large range of vehicles spread generously across the various segments, buyers need to brace for a price increase in the medium-term as manufacturers spend more money to keep CO2 emissions in check. This was revealed in a call with members of the media, where he revealed the justification behind the predicted price hike.
“Volkswagen is using various resources to counteract rising costs. Nevertheless, it is clear that it will not be possible to completely offset the higher material costs.” — Christian Dahlheim, Management Boardmember (Sales), Volkswagen AG
Among some of those ‘offset’ measures include a flurry of new cars – the Volkswagen T-Cross, SEAT Tarraco, and Audi Q3 will likely bring quite a bit of money back into the coffers. However, the profitability of those models (which is likely massive) will be hampered somewhat by waning market sentiment and saturation. The demand in China & Europe for example is expected to remain at broadly similar levels as they were last year – no growth for the Chinese market will be unprecedented for Volkswagen, who enjoyed a strong year in 2018 despite trade tensions.
According to Automotive News Europe, of all of VWG’s brands, Porsche was the most profitable brand, but the continued expenditure to get the new Taycan electric 4-door coupé to market will likely hamper the Stuttgart’s profit predictions for this year. The same can be said of nearly all of VWG’s brands, with significant capital being thrown into electrification.
That said, Volkswagen warns that the price hikes won’t be limited to just them – the capital demands that are being levelled at nearly every global automaker to comply with tightening emissions regulations and the progressive shift towards battery-electric zero-emissions motoring. Sounds grim, huh?