Volkswagen has a chance of posting solid growth in its operating business this year even as it grapples with its diesel emissions scandal and a strategic repositioning, its chief executive Matthias Mueller said.
Cost reductions at Europe's largest automaker are "in full swing" at individual brands and across the group, Mueller said at Volkswagen's earnings press conference.
The CEO reiterating the company's target for an operating margin of 5-6%, compared to 6% last year, adjusted for special items.
VW incurred an operating loss of €4.1 billion last year, the biggest in its history, after setting aside €16.2 billion in provisions and cutting its dividend to help pay for the emissions-test cheating scandal.
Costs of the manipulations and slumping demand in overseas markets led operating profit at VW's core namesake brand to plunge 15% last year to €2.10 billion.
This caused the return on sales to fall to 2% from 2.5% - way below a 6% target.
VW is stopping production of unprofitable models, shrinking complexity in parts, streamlining model development and shedding hundreds of temporary jobs to accelerate cost savings at the VW brand.
The steps have triggered a dispute with the powerful labour leaders who occupy about half the seats on VW's supervisory board.
"We know that 2016 will be another highly demanding year for the VW Group," Mueller said, adding the company was making gradual progress in clearing up the emissions scandal.
VW aims to increase its electric-car offering and is taking steps to boost online connectivity in its models as it struggles to reposition itself in the wake of the scandal.
The company said it now expected long-term cost savings from its efforts to align truck brands MAN and Scania of as much as €1 billion a year, up from a previous target of €850m.
Efforts to improve structures and increase efficiencies across the 12-brand group will be fully in place by the start of 2017, and a business strategy spelling out targets and priorities through 2025, to be published in June, is making "good progress", Mueller said.
