Volkswagen trims car development time to 3 years: Here's why
What's the story
Volkswagen is gearing up for a major overhaul to save costs and gain an additional $11 billion by 2026.
Through its "Accelerate Forward/Road to 6.5" program, the carmaker aims to drastically reduce the development time of new cars to three years.
CEO Thomas Schäfer admitted that the German marque is "no longer competitive," and these steps aim to boost its efficiency and market competitiveness.
Development
New car development time is around 50 months at present
To reach its cost-cutting targets, Volkswagen plans to shorten new car development time from 50 months to just 36 months.
The automaker asserts that three years will be sufficient to launch a car "without sacrificing quality or safety." This move alone is expected to save nearly $1 billion by 2028.
Moreover, during a car's 36-month development phase, the company will build 50% fewer prototypes for evaluation, resulting in annual savings of $438 million.
Information
Cost-effective procurement services will also help in increasing efficiency
Other strategies include more cost-effective procurement services, enhanced after-sales business, and further optimized production times, which are anticipated to generate combined annual savings of $844 million. With such combined efforts, Volkswagen aims to become more profitable soon.