Volkswagen's Cost-Cutting Strategy: 20,000 Employees Opt for Job Exits

Volkswagen, Europe's largest automotive manufacturer, is advancing more swiftly than anticipated in its planned reduction of workforce. According to HR chief Gunnar Kilian, approximately 20,000 employees have already committed to leaving the company by 2030. This figure represents more than half of the 35,000 positions that the company intends to eliminate in its restructuring efforts.

The agreement between the company and labor unions, reached after extensive negotiations in December, outlines a restructuring plan for Volkswagen's core brand. By 2030, nearly a quarter of the 130,000 jobs in Germany are expected to be cut. Notably, the plan excludes layoffs due to operational needs, focusing instead on early retirement and severance packages for employees willing to leave voluntarily.

To facilitate this transition, Volkswagen has expanded its early retirement options and is also offering severance packages to younger employees who choose to depart from the company. Kilian commented that initial measures from the 'Future Volkswagen' agreement are taking effect, allowing the company to make measurable progress in reducing factory costs in Wolfsburg while also ensuring a socially responsible approach to job reductions at its six German sites.

Despite these advances, the company acknowledges that it has not yet achieved its overall objectives. Financial executive David Powels emphasized the need for ongoing efforts to ensure Volkswagen's competitiveness and sustainability by 2029. The cost-cutting measures aim to reduce excess capacity while improving profit margins for the struggling core brand.

Volkswagen's core operations have been challenged by rising costs and surplus production capacity in its facilities. The company has particularly felt the impact of diminished demand for electric vehicles at its manufacturing sites in Zwickau and Emden, resulting in production reductions. In contrast, the Wolfsburg plant, which produces traditional combustion engine models such as the Golf and Tiguan, has recently implemented additional shifts due to solid sales of these vehicles. However, concerns persist about the long-term viability of these models, as Betriebsratschefin Daniela Cavallo indicated that the demand for the Golf is expected to continue its decline.

Additionally, Cavallo warned of potential challenges regarding production capacity starting in 2027, as the Golf model is slated to shift production to Mexico. The Wolfsburg plant is expected to undergo modifications for a new electric Golf model, which will not be ready for production until later. She noted that a temporary four-day workweek could become a reality if proactive measures are not taken to address these issues.

The recent assembly meeting was attended by various executives, including CEO Oliver Blume and brand head Thomas Schäfer. However, unlike previous gatherings, neither addressed the employees from the podium this time.