VW in the US - And now? | Made in Germany
Emissions of VW scandal and its impact on the German automotive industry and suppliers.
Volkswagen Group copes with the scandal of emissions that should weigh on the financial performance of the group The Company believes that the scandal emissions will cost up to 40 billion order to prepare for possible losses, Volkswagen plans of cost reduction measures to mitigate the expected cost measures should include cuts in investment programs, labor and supplier costs.
Volkswagen only the exclusion of other Volkswagen Group brands sales is the largest company in the German automotive industry, which represents 33 of the output value of industry in 2014. Consequently, the Volkswagen decision to reduce spending could have broader effects on the German and European automotive industry.
Top 5 companies in the German automotive industry Share of total value of 2014 production.
Source Euromonitor International company reports.
In 2014, the German automotive industry spent 13 2 billion on investment, with a significant portion generated by the industry leader, Volkswagen Group In November 2014, Volkswagen plans to invest 6 billion 85-wide World through 2015-2019, mainly to improve existing models However, now Volkswagen plans to stop non-strategic models updates and plans to reduce investment of 1 billion per year by 2015-2019.
The cuts to investment could have a wider impact on the performance of the German automotive industry in 2014, the majority of investment was for the industry to expand or modernize production facilities, it is very likely that Volkswagen will stop future expansion plans, which negatively affects industries such as machine tools, construction and architectural and engineering services.
In addition, the planned cuts in the Volkswagen model range and delays in revisions of the model will affect sectors such as computers and related services, bearings, gears and drive components, and electric motors the suppliers of these products or services are often involved in new knowledge-intensive product development and Volkswagen cuts are likely to have an adverse effect on the German engineers and suppliers.
Top 15 Investment costs of the automotive industry in Germany, in 2014.
Intra-industry trade and labor costs are the main cost categories in the German automotive industry Due to the Volkswagen Group emissions scandal has already announced that its employee compensation policy could be reassessed, with the downsizing of operations possible in 2014, the German automotive industry has spent 120 billion for employee compensation, with the Volkswagen group generates a significant share of this estimated Volkswagen group employs 170,000 workers in Germany, out of a total of 721,000 employees in the automotive industry German.
In October 2015 Volkswagen announced plans to extract 3 billion providers to reduce costs scandal Would emissions mainly affect the intra-industry trade, both in Germany and other European countries from 2014, German automotive parts and accessories industry imported a value of 59 7 billion or 51 of Volkswagen parts and accessories market value of business partners are already preparing for expected losses, for example, the Italian Association of estimates of automotive industry that Italian suppliers will lose 1 5 billion as a direct result of the scandal of Volkswagen.
Other automotive component suppliers such as electrical equipment for engines and vehicles, are also likely to incur losses These providers are likely to lose due to lower volumes of tightening expected price of supplied components and production Volkswagen, like a number of consumers are turning their back on the product group Besides the industries automotive suppliers such as management companies and consultants could be negatively affected too, as Volkswagen plans deep cuts on marketing expenses and promotion.
Top 15 automotive supplier costs in Germany, in 2014.
In addition to the current costs that Volkswagen is ready to commit, structural changes in the supply chain can be expected long-term Volkswagen diesel technology is currently under pressure and the company now plans to invest more in electric vehicle technology.
Volkswagen Group is investing in standardized components for powertrains electric vehicles, with an expected range of Volkswagen Group plans 500 km from launch up to 20 electric models by the end of this decade, and if successful, it would encourage to German rivals to follow.
Such a strategy could help Volkswagen to mitigate losses of emissions scandal and even extract something positive development of electric vehicles that have clear prospects It could also mean structural changes in the supply chain of German automotive industry, with electric motors or batteries powertrain suppliers increase their greater share in future such developments stimulate demand for engineering services, as the industry will improve and integrate new powertrains in vehicles automobiles.
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Justinas Liuima is senior industry analyst at Euromonitor International He holds a BA in Economics ISM University of Management and Economics and is now studying in the International Master Justinas marketing program began working in Euromonitor International in 2013 as industry analyst in industrial Passport team where he analyzes the professional interests transportation industries include automobiles, aircraft and market research, you can find him on LinkedIn.
VW Scandal Impact Emissions of the German automotive industry, emissions, scandal, impact, German.