Volkswagen AG Increasing Shared Components in Effort to Become Largest Automaker

Volkswagen Auto Group will overhaul its complete model lineup in an effort to standardize components and technologies, increase profits, and allow it to surpass Toyota and General Motors to become the world’s largest automaker by 2018, reports Automotive News. The overhaul could affect all of Volkswagen AG’s brands, which includes Audi, Bentley, Bugatti, Lamborghini, Porsche, Seat, Skoda, and Volkswagen.

VW is planning on further standardizing parts like axles, steering columns, and most importantly, chassis to help it lower production costs by 20 percent, cut assembly times by 30 percent, and save up to $6.5 billion per year. The move to shared parts will also allow VW to produce cars from different brands at the same plant.

AN reports that there is some worry among analysts that VW’s sharing could go too far, either potentially diluting VW AG’s brand’s equity, or worse, leading to a rash of defects across all product lines. Christoph Stuermer, an analyst with IHS Automotive said to Automotive News, “If something goes wrong, then one may get hit by an epidemic plague. The more connected the structures, the higher the threat of contagion.”

Look to Toyota for a prime example of “contagion.” More than 8 million Toyotas were recalled in the United States in 2009 at a cost of over $48.8 million as a result of the “unintended acceleration” debacle. VW has said it will avoid the mistakes Toyota made and will maintain its quality.

“Risks exist when you undertake far-reaching improvements,” VW Production Chief Hubert Waltl said to Automotive News, “But the implementation process is manageable.”

Volkswagen also risks diluting its brand’s equities by way of rampant platform sharing. Many were (and still are) critical of GM’s penchant for badge engineering. While GM has gotten much better regarding badge engineering post-bankruptcy, the automaker was the poster child of the practice – cars like the Chevrolet Cobalt and Pontiac G5 differed only by grille and badge.

Volkswagen will start the process of sharing components among its brands with the all-new Audi A3 next year.

Source: Automotive News (Subscription Required)

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