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Car prices will rise significantly to comply with CO2 emissions limits - Volkswagen Group

Auto News - Published on Wed, 16 Jan 2019

Image Source: Automotive News
Automotive News reported that Volkswagen Group said higher material costs to comply with CO2 emissions regulations will significantly increase the price of its cars in the medium-term. Cheaper cars will proportionately see the biggest price rises, Volkswagen said Friday, with increasing safety requirements an additional burden on costs.

VW head of sales Christian Dahlheim said on a call with reporters said that "Volkswagen is using various resources to counteract rising costs. Nevertheless, it is clear that it will not be possible to completely offset the higher material costs."

The drag on automakers has steadily increased over the past few months, culminating in a number of profit warnings last year. Into this year, trade tensions look likely to persist, while concerns over Brexit are escalating and China’s auto market declined for the first time in two decades last year. Both Ford and Jaguar Land Rover announced thousands of job cuts in Europe Thursday.

On top of these factors, the payoff on the costly shift into electric cars remains years away. Sales remain at a fraction of overall deliveries, and poor charging infrastructure is keeping consumers on the fence to switch to battery cars. Volkswagen sold 100,000 plug-in and battery vehicles last year, less than 1 percent of the total.

Dahlheim said in a statement that "The challenges for our business won’t ease given the geopolitical volatile developments adding that VW was well positioned to navigate industry turbulence.

A slew of fresh models should help stem the tide of negative factors, VW said, such as the VW T-Cross, Seat Tarraco and revamped Audi Q3 compact SUV. Still, demand in China and Europe,

VW’s two key regions, is forecast to hover around the same level as last year, limiting growth. The US vehicle market might decline slightly, and VW forecast a difficult first quarter in China.

VW proved relatively resilient last year, despite the trade tensions, drop in China and stricter emissions tests in Europe triggering production bottlenecks.

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Posted By : Joykumar Irom on Wed, 16 Jan 2019
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