Volkswagen’s CEO has confirmed plans to cut 50,000 jobs as part of a huge cost-cutting operation, although it will not be closing any of its factories.
Speaking to staff, CEO Oliver Blume confirmed that Volkswagen would be moving forward with plans to cut 50,000 more jobs across the Volkswagen Group business.
Despite this, a memo circulated among employees suggested that up to 100,000 job cuts are being considered as it attempts to keep up with rivals in the space.
The streamlining effort has been enacted as Volkswagen struggles with competition from Chinese counterparts, in addition to the transition to electric vehicles.
Mr Blume acknowledged that the company has a 20 per cent cost disadvantage compared to rivals, adding that pressure on the German manufacturing industry had also affected the brand.
In the memo, the chief executive said: “We are currently assessing across all brands, companies and regions how many adjustments are actually necessary and feasible.”
The German manufacturer is expected to make cuts to Volkswagen Group subsidiaries, including Audi and Porsche, Reuters reported.
Mr Blume said the Group could not yet confirm competitive use cases for plants in Emden, Hanover, Zwickau and Audi’s Neckarsulm.
Volkswagen is planning to cut around 50,000 jobs in a strong cost-cutting campaign
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REUTERS
Reports suggest that the Neckarsulm plant, situated in Baden-Württemberg, around 38 miles north of Stuttgart, will see production end between 2031 and 2034.
The chief executive said “smart solutions are always better than closing a plant”, but warned that Germany “cannot turn a blind eye” to threats to the market.
He directed attention to what has been described as a “flood” of vehicles from China and other manufacturers across Europe.
Volkswagen could also cut its vehicle lineup by up to half, as well as reducing production capacity to nine million vehicles per year, down from 10 million.
Volkswagen has struggled to adapt to current market conditions in recent years
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VOLKSWAGENData from the European Automobile Manufacturers’ Association (ACEA) shows that the Volkswagen Group remains the best-selling conglomerate in Europe.
Across its brands, it has captured a market share of 25.8 per cent across the European Union, European Free Trade Association and the UK between January and May.
This includes a total of 1.5 million vehicles sold, while Volkswagen, as a standalone manufacturer, has secured 10.1 per cent of the market.
The Volkswagen Group includes Volkswagen, Audi, Porsche, Lamborghini, Skoda, Seat, Cupra, Bentley and Ducati.
Protests took place outside the Volkswagen factory in Zwickau last week
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GETTYThe decision to make the cuts to the business comes after Hildegard Müller, president of the German Association of the Automotive Industry (VDA), issued a damning indictment on the future of the European car industry.
She explained that warnings about the sector had been acknowledged by the sector, but the solutions had “regrettably largely failed to materialise – namely, the necessary change of course”.
She added: “Reality has overtaken political goals and approaches and is increasingly putting jobs at risk.
“The crisis affecting the region as a business location is hitting European industry as a whole. The consequences are visible and palpable every day – and are becoming increasingly dramatic.”