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VW's Winterkorn tells 20,000 staffers of big cost-cutting plans

During a gathering of 20,000 Volkswagen Group employees at company headquarters in Wolfsburg, Germany on Wednesday, CEO Martin Winterkorn dropped a bombshell. The boss stated that the automaker isn't operating efficiently enough and admitted the company needs to radically start cutting back to raise its profit margins. To right the ship, Winterkorn has proposed killing off less profitable models and spending less on research and development.
According to Reuters, Winterkorn wants to raise the VW brand's profit margin from about 2.9 percent in 2013 to a target of 6 percent. To make that possible, his plan amounts to increasing cost cutting until Volkswagen reaches about 5 billion euros ($6.7 billion) per year to get things back in order. "Over the short-term, we urgently need more efficiency and higher profit," the CEO said during his speech, according to Reuters.
However, Winterkorn can't make these decisions unilaterally. Volkswagen's works council also has a seat on the supervisory board to represent laborers, and it isn't likely to take the proposed cuts sitting down.

2014 Volkswagen XL1 [w/video]

World's Most Efficient Car Impresses, Not Without Compromises
Among our many duties at the recent Geneva Motor Show, we were offered a pretty exclusive drive in the new Volkswagen XL1 hyper-efficient plug-in diesel hybrid. There is so much that is interesting about a car like this reaching production from a major automaker that it's tough to know where to begin.
First off, you should know that - at least for this generation - there is absolutely no chance in Albuquerque that this "1-liter vehicle" (i.e. a vehicle that can burn just one liter of fuel to travel 100 kilometers, or 62.1 miles) will ever make it into the hands of North American customers. We, too, were having trouble imagining an XL1 in typical American traffic, surrounded by comparatively massive pickups and SUVs. The driving experience had us recalling a couple of weeks in 1999 when we drove the then-revolutionary Honda Insight hybrid on US roads. We keenly remember the feeling of being very small and vulnerable, even as we felt proudly green in our 61-mpg Tochigi pod. Thing is, the Volkswagen is smaller still, and nearly as light despite its more complex drivetrain and safety features.

EU formally questions French government assistance of Peugeot's finance arm

Recently, the finance arm of PSA/Peugeot-Citroën was in such debt trouble that it was pricing itself out of the car loan market. The rates it was paying to service its debt, which was rated one step above junk, were so high that it was forced to charge car-buying customers higher rates than they could find elsewhere. This was adding to Peugeot's already impressive woes by sending revenue out the door to competitors.
Two months ago a deal was worked out with the French government whereby the state would provide 7 billion euro ($9 billion USD) in bonds to guarantee the finance arm's loans. The French government could nominate someone to join the Peugeot board, Peugeot would guarantee more French jobs, and on top of that deal, other banks would provide non-guaranteed loans. The government would take no equity stake in the car company.
Although not yet finalized, the arrangement is meant to create some breathing room for Peugeot Finance to lower its interest rates for customers, and a government-nominated board member, Louis Gallois, was recently named to Peugeot's supervisory board. The arrangement was also openly questioned by at least three competitors: Ford, Renault - which is 15-percent owned by the French government after it received state aid - and the German state of Lower Saxony, itself a 15-percent shareholder in Volkswagen.