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Volkswagen lays off 500 Chattanooga workers

The redesigned Volkswagen Passat has been a decent seller since its debut in 2011, but sales have apparently dropped off enough that the automaker is trimming some of the employees from its Chattanooga, TN assembly plant. According to Automotive News, Volkswagen will be cutting shifts and laying off 500 contracted workers in response to slowing sales.
Currently, the plant has three teams running 10-hour shifts Monday through Saturday, but starting May 13, this will be reduced down to two teams running 10-hour shifts Monday through Thursday. This will be done to reduce dealer inventory (the article says that VW dealers, on average, have a 97-day supply of Passats) and production capacity (currently running at an annual pace of 170,000 units, which is more than the 150,000 annual units the plant was planned to produce).
This, of course, isn't saying that the Passat has been a failure since VW added 200 full-time employees to the plant in February 2012 to keep up with increased demand. The AN article says that automakers frequently overstaff plants during the launch of a new product - or in this case, a new product and a new plant - but eventually reduce the workers as things run smoother and more efficiently.

As VW electrifies, it questions the role of Lamborghini, Bugatti, Ducati

FRANKFURT — Volkswagen needs to change to stay relevant in the electric and digital vehicle era and will announce "important steps" to that end before the close of the year, Chief Executive Herbert Diess said on Wednesday. "Volkswagen needs to change: From a collection of valuable brands and fascinating combustion-engine products that thrill customers with superb engineering — to a digital company that reliably operates millions of mobility devices worldwide," Diess told shareholders at the company's virtual general meeting. Vehicles need to stay in contact with customers, offer new services and comfort functions on a weekly or even daily basis, he said. "We will take further important steps to set the course for this in the rest of 2020," Diess said. Senior executives told Reuters the company is reviewing what role its high-performance brands Lamborghini, Bugatti and Ducati will play as the company increasingly focuses on electric, digital and autonomous vehicles. Volkswagen, which also owns VW, Audi, Porsche, Seat and Skoda, is looking at whether it has the resources to accelerate development of electric platforms for smaller brands at a time it is investing billions to transform its more mainstream cars. Asked whether Ducati, which is known for making noisy combustion-engined motorbikes, has an electric future, Markus Duesmann, who oversees research and development for the group, said: "It will not take long until we see an electric Ducati." Whether Ducati, which is a medium-sized premium motorbike brand, would offer an electric variant, depends on whether a bike could offer range comparable to a combustion-engined variant, Duesmann said. Advances are being made in battery technology which could make this possible, he added. Separately Frank Witter, the company's chief financial officer, in response to a question about whether a sale of Lamborghini is planned, said Volkswagen does not comment on speculation about potential divestments. Lamborghini's Chief Executive Stefano Domenicali this week announced his departure from the sports car maker to take on a new job as president of Formula One. VW needs cash Volkswagen is reviewing the future of these three high-performance brands as part of broader quest for more economies of scale as it shifts to mass producing electric cars, senior executives told Reuters.

If VW defaults on loans it may sell Bentley or Lamborghini

If something goes catastrophically wrong with Volkswagen Group's recent $21 billion loan, brands like Bentley or Lamborghini could hit the auction block. According to two insiders to Reuters, the beleaguered German automaker agrees with its creditors to sell assets if the company somehow can't pay back the debt in a year. One of these anonymous people claimed the company hasn't yet deliberated over what to sell. However, the sources were willing to speculate that the power engineering portion of Man could be among the first to go. "Volkswagen may also consider divesting luxury car brands Bentley and Lamborghini or motor bike brand Ducati, although these units don't really move the needle," an insider said to Reuters. VW Group negotiated with the banks earlier this week to get the massive loan. The cash is necessary as a buffer in case the automaker doesn't have enough money on hand to repair vehicles or settle upcoming fines. VW would reportedly issue bonds in the spring to begin paying the debt. The company's bills will start racking up quickly in the new year. German authorities mandate a recall there in early 2016, and repair campaigns in the US for the 2.0- and 3.0-liter diesel engines are inevitable. There are also hundreds of class-action lawsuits to settle. The company needs to resolve its CO2 emissions scandal in Europe, too. In response to these financial threats, VW management created a cost-cutting plan to slash the research and development budget by $1.1 billion next year.