Volkswagen looks to cut up to 7,000 jobs
FRANKFURT: Volkswagen AG’S main car brand plans to deepen cost cuts and axe more jobs as profits slip in the industry’s shift to electric and self-driving cars.
The German carmaker said on Wednesday it will eliminate as many as 7,000 positions—with measures including early retirement and not filling vacant positions—for an annual profit gain of €5.9 billion starting in 2023.
“We will significantly step up the pace of our transformation so as to make Volkswagen fit for the electric and digital era,” VW brand chief operating officer (COO) Ralf Brandstaetter said.
The VW car brand, which accounts for about half of the group’s global deliveries, employs about 185,000 workers
Labour costs are a “big concern” that risk derailing a much needed streamlining of operations, VW chief executive officer (CEO) Herbert Diess told investors on Tuesday.
Diess, who also heads up the VW brand, has been axing slowselling models and car variants to reduce complexity. Further measures will include lowering material costs and lifting productivity at its factories by 5% to achieve an operating profit margin of 6% in 2022. out of a total workforce of 650,000. Vwsigned a labour pact in 2016 VW has been pushing to rein in to cut 30,000 jobs worldwide and bloated expenses to lift profitabilgenerate €3 billion in annual savity that’s trailing rivals. Return ings. The brand has achieved €2.4 on sales for VW’S namesake billion in savings so far and a net brand last year fell to 3.8% from reduction of more than 6,300 posi4.2% because of higher spending tions, despite adding 2,700 jobs on future electric models and proincluding in software operations, duction bottlenecks triggered by VW said on Wednesday. “We are stricter emission rules in Europe. on track,” Brandstaetter said.
Bernd Osterloh, VW’S powerful labour leader, signalled support for further cutbacks in principal, stressing a job guarantee until at least 2025 remains in place with any job reductions based on voluntary agreements. He also urged a draft labour pact on retraining employees for software and digital operations, Osterloh told Bloomberg in an emailed statement.
For this year, the VW nameplate targets revenue growth of as much as 5% and an operating return on sales between 4% and 5%. It will boost investment in future technology to €19 billion through 2023, an increase of €8 billion.
VW will start producing the first model of its all-electric I.D. car range toward the end of this year. Order books for electric I.D. hatchback open on May 8.