30,000 jobs to go in Volkswagen restructuring

Volkswagen cuts 30,000 jobs in reputation recovery plan

Image credit: Reuters

Volkswagen plans to cut 30,000 jobs in a restructuring of its primary VW brand as it tries to recover from a scandal over cheating diesel emissions tests.

The German company said the job cuts are part of a long-term plan to improve profitability as well as shift resources and investment to electric-powered vehicles and digital services.

Company officials at its headquarters in Wolfsburg said 23,000 of the job cuts will be in Germany and measures will save some 3.7bn euro (£3.2bn) a year from 2020.

Chief executive Matthias Mueller said it was “the biggest reform package in the history of our core brand”.

In addition to Volkswagen, the company also makes cars under other brands including Porsche, Audi, Seat, Skoda and Lamborghini.

The lay-offs cap a difficult year for Volkswagen, which has been embroiled in an emissions-rigging scandal that damaged the company’s reputation and cost it billions.

In response, Volkswagen has agreed to pay $15bn (£12bn) to US authorities and owners of some 500,000 vehicles with software that turned off emissions controls. Around 11 million cars worldwide have the test-deceipt software.

The scandal has been a spur for the company to address longstanding problems, such as high fixed costs at its manufacturing locations in Germany and excessively top-down management.

Herbert Diess, head of the core Volkswagen brand, said the company had let costs rise and lost ground in terms of productivity. The changes, he said, would make it leaner and more efficient.

The company has said it aims to cut non-essential costs and investments and shift resources toward battery-powered cars and internet-based services such as car-sharing and ride-sharing.

It had been slower than some competitors to move toward electric cars but has shifted its view after the scandal underlined diesel’s limitations.

Volkswagen now says it plans to introduce more than 30 electric-powered vehicles by 2025, and to sell two to three million of them a year.

To make the job cuts, the company has cut a deal with its powerful worker representatives.

Volkswagen has agreed to keep much of the future investment in new technology in Germany and to rely on voluntary departures such as early retirement, with no firings.

Top employee representative Bernd Osterloh said the next generation of electric vehicles will be made here in Germany, not abroad.

Volkswagen Group, with its multiple brands, has more than 600,000 employees worldwide but the cuts will mainly fall on its 120,000-strong German workforce.

Other job cuts are foreseen in Brazil and Argentina.

Volkswagen’s package of measures received a cautious welcome in markets.

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