Volkswagen plans to cut 10% from its materials costs by 2008 and will sharply step up buying from suppliers in China, the head of purchasing told Reuters.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

Related Company Profiles

View all

Lopping a tenth from materials costs would save around 1 billion euros ($1US.22 billion), Francisco Javier Garcia Sanz told Reuters at a supplier awards event, adding it had already discussed this with suppliers.


“In the next three years we want to have purchasing volume of $1 billion from China,” Sanz added, specifying that this represented annual purchasing volumes, up from around $250 million a year now.


VW officials had already signalled that they were eager to get steel from China, and Sanz said the company had already received and was processing its first Chinese steel shipment.


But the news agency noted he dismissed speculation that VW was playing the China card to improve its leverage in negotiations with steelmakers such as Arcelor and ThyssenKrupp.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Chief executive Bernd Pischetsrieder reportedly said in a newspaper interview this week that Volkswagen planned another multi-billion-euro efficiency programme in 2006 to 2008 to help offset sagging car markets and rampant price wars.


“By 2008, more than €4 billion in measures aimed at improving earnings could be necessary again,” Pischetsrieder had told the Frankfurter Allgemeine Zeitung, according to Reuters, adding that this did not include just cost-cutting measures.


VW is already planning to achieve cost savings of €3.1 billion this year to help it reach its forecast of higher operating and pre-tax profit before and after special effects.


Sanz told Reuters talks with VW suppliers had also focused on quality, promising he would be tough but fair in dealing with partners. But he said suppliers had agreed almost unanimously that VW’s savings targets could be attained.