Car brand Volkswagen struggles to meet cost-cutting target, says Handelsblatt By Reuters

BERLIN (Reuters) – Volkswagen’s ( ETR: ) car brand is struggling to meet its 10 billion euro ($11.14 billion) cost-cutting target, undermined by problems such as low sales and missing parts, a informed the German newspaper Handelsblatt on Wednesday.

A Volkswagen spokesman declined to comment.

The brand was 2-3 billion euros short of its savings target for this year, two sources who declined to be named told Handelsblatt.

Europe’s leading carmaker by sales announced details last December of planned cost cuts, which it hopes will lift the brand’s return on sales to 6.5% by 2026, from 2.3% this year year so far.

The measures listed to achieve this goal included reducing the administrative costs of its namesake brand by a fifth, saving one billion euros by 2028 by reducing product development cycles to three years from 50 months, reducing production times and eliminating a new project of 800 million euros. Research and development center in its hometown of Wolfsburg.

It was said at the time that savings of up to €4 billion should come into effect during 2024.

Chief Financial Officer Arno Antlitz said at the automaker’s August results conference call that some measures would take time to take effect.

Chief executive Oliver Blume told the conference that “costs, costs, costs” were the focus for the coming years after reporting lower margins for the first half of the year.

(1 USD = 0.8976 euros)