Very interesting article regarding the plant in Puebla, Mexico. As I reported yesterday, New Beetle renders are popping up and being reported as next -gen 2010 designs. The Motor Trend article seems pretty sure of it’s claims.
Now, regarding the question within Auto Week’s article, there is a hush within Volkswagen about the future, that they are not killing it off in the short term and that a successor is being talked about!
I am looking forward to seeing how this materializes! The drawings look great!
VW’s Mexican operations grow strong, but plans for retro-car uncertain
PUEBLA, Mexico – The CEO of Volkswagen AG’s rapidly expanding Mexican affiliate says the unit will be profitable this year after a break-even 2006.
“There was a $2 billion investment program between 2002 and 2006,” CEO Otto Lindner said in an interview this month. “This year and next year will be profitable.”
The key reasons for the expected black ink: big boosts in production and efficiency.
“Cost levels will be 30 percent lower in 2008 than in 2005,” Lindner said.
With the euro at all-time highs against the dollar, VW will boost production to 400,000 vehicles from 348,000 in 2006 and 301,000 in 2005. The Puebla plant makes Jettas, Boras, Golfs and New Beetles, along with medium- and heavy-duty trucks.
For all of North America, VW reported an operating loss of 607 million euros, or about $806.5 million, in 2006.
Export sales booming
Lindner, 58, an Austrian telecommunications and economics graduate, directed the Audi assembly plant in Ingolstadt, Germany, for several months before starting his current job three years ago.
He said Puebla now produces 1,600 cars a day in 250 working days a year – or 400,000 cars a year.
“In the coming weeks, we will increase our capacity to 1,800 vehicles per day, and so next year we will be at our full capacity of 450,000 vehicles per year.”
The Puebla plant began producing the new Jetta in 2005. “This is our volume car for the United States and the volume car for Puebla,” Lindner said. “We are producing 1,000 Jettas per day for all markets except for China and South Africa.
“In China and South Africa, we deliver the parts, and they assemble the cars themselves.”
Lindner said that in 2006, about 30 percent of the Mexican unit’s production went to Europe. “In 2007, we will increase this to 40 percent of total production,” he said.
“There is one reason: the Golf Variant. It is mainly a European car.”
Asked whether announcements about new investments in Puebla were forthcoming, Lindner said, “We are talking about projects, for sure, and we are expecting to be successful in getting new projects for Mexico.”
Million New Beetles
The Puebla plant will celebrate the production of the millionth New Beetle next month. But VW’s long-term plan for the vehicle is a secret that Lindner is not about to reveal.
“We are not planning to end the New Beetle’s life in the short term,” he said, noting that the vehicle’s sales had exceeded VW’s expectations by about 100 percent.
“But of course, sooner or later we will have to start thinking about a successor. And it will not be easy, considering the special character of this car. And we hope to produce the successor in Puebla.”
When pressed, Lindner acknowledged that the parent company was talking about “whether we will have a successor” to the New Beetle. Production of the car started 10 years ago. The New Beetle was the first VW car for world markets that was assembled outside Europe.
Lindner was asked whether VW might build a small car for the United States, either under the VW badge or for another automaker.
“There are no such plans in the near future, not for Volkswagen de Mexico,” he said. “But we are aware that the opportunity is there, not only for the U.S. but also for the Mexican market. This is for the Volkswagen Group (to say). We can’t say it is a Volkswagen de Mexico project. It depends on future strategies for North America.”
Meanwhile, the plant’s productivity gains will be crucial benchmarks.
“That is very important for the future because, thinking about new plants in eastern Europe and India, we have to increase productivity in Mexico,” Lindner said.
“The biggest change on the shop floor is to implement a production system that compares with elsewhere. We are really stricter. We started this in 2005 and are really on the way.
“Thirty percent productivity improvement is a realistic figure. I don’t think we will stop at 30 percent. To increase productivity 10 percent per year should be possible in the years after.”
Asked how the savings had been achieved, Lindner responded: “At the beginning, we weren’t able to do this by ourselves. We have started to work with experts – mainly experts with Toyota or Japanese experience or such lean-production-system contacts – and the main point is to train and develop our people. We are now working with the people on the shop floor on typically lean modules that are state-of-the-art in the industry. But we have a lot to do to catch up.”
As part of the retooling for the new Jetta production line, Volkswagen doubled its robots to 800, mainly in the body shop. Increasing the number of robots “will only come with new production lines,” Lindner said. “It depends on whether we get them or not.”
The Puebla plant also is under pressure to help its parent company deal with the record high value of the euro compared with the dollar. That means buying more parts and services locally.
“We make constant efforts to increase the share of our purchasing in the region,” says Rafael Pinero, purchasing chief of Volkswagen de
Mexico. “We also want our Tier 1 suppliers to maximize the value of the subcomponents that they buy in the region.”