Tens of thousands of VW employees must now fear for their jobs: according to a press release, the ailing Volkswagen Group wants to significantly reduce its medium-term budget. The red pencil must be used more widely than previously communicated.
In total, up to 30,000 jobs are at stake in the planned austerity program in Germany, “Manager Magazine” (“MM”) reported on Thursday, citing its own information. The company itself has not confirmed this.
A spokeswoman said: “One thing is clear: Volkswagen must reduce costs at its German locations.” This is the only way the brand can earn enough money for future investments. “How we achieve this goal together with employee representatives is part of the upcoming discussions,” she said. VW could not confirm the figure.
High costs, low turnover
VW is struggling with high costs for its core brand. The carmaker has terminated the decades-old labor security agreement with the unions in Germany, and plant closures and layoffs are under discussion. Brand boss Thomas Schäfer wants to increase the operating return on investment to the target level of 6.5 percent in the coming years. Negotiations with the union IG Metall begin on September 25.
The pressure is apparently so great that far-reaching cuts in personnel are on the table. According to “MM”, the number of employees in Germany is expected to fall by 30,000 in the medium term, from 130,000 jobs, according to hardliners. CEO Oliver Blume also considered this realistic in a small circle in the long term.
His predecessor Herbert Diess had already encountered great resistance to ideas about job cuts of this magnitude and had to quickly scrap the associated plans.
Department for the future could be hit hard
According to the magazine, things could be particularly bitter in the area of research and development. According to some forecasts, 4,000 to 6,000 of the approximately 13,000 employees in Germany would have to resign. Partial pension and severance payments would not be sufficient measures for this.
As part of its investment planning, VW had already announced that it would have to spend heavily on new technology, drives, batteries and software in the years 2023 to 2024 – but after that the investment rate would have to slow down again. Last year, 13.5 percent of sales in the automotive sector were spent on fixed assets and research and development, around 36.1 billion euros.
So far, CFO Antlitz has budgeted 13.5 to 14.5 percent of revenue for this year. Blume promised investors last year that interest rates should be below 11 percent in 2027 and even fall to around 9 percent in 2030. They have been complaining for years about the high costs, because they also reduce the financial scope for shareholder payouts.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
