Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

VW brand to cut up to 7,000 jobs in new savings drive

Published 03/13/2019, 06:59 AM
Updated 03/13/2019, 06:59 AM
© Reuters. FILE PHOTO: A Volkswagen badge on a production line at the VW plant in Wolfsburg, Germany

© Reuters. FILE PHOTO: A Volkswagen badge on a production line at the VW plant in Wolfsburg, Germany

By Edward Taylor

WOLFSBURG, Germany (Reuters) - Volkswagen (DE:VOWG_p) will cut up to 7,000 positions, aim to boost productivity and deliver 5.9 billion euros ($6.7 billion)of annual savings at its core VW brand by 2023, in its latest attempt to raise profitability at its top-selling division.

The plan, announced on Wednesday, comes a day after the German automaker warned it would cut jobs as it speeds up the rollout of electric cars, which are less complex to build and require fewer workers.

Volkswagen has struggled to raise profitability at the VW brand for years. Last year, the brand's operating margin fell to 3.8 percent, lagging peers such as Peugeot which delivered a margin of 8.4 percent.

The VW brand is targeting a 6 percent margin in 2022.

Volkswagen has ruled out compulsory layoffs until 2025, but early retirement of staff working in administrative positions at the company's headquarters in Wolfsburg, Germany, will help reduce the workforce by 5,000 to 7,000, it said.

The new cost cutting drive is a continuation of Volkswagen's 3 billion euros Zukunftspakt savings plan. So far, VW has realized around 2.4 billion euros of the planned 3 billion annual cost savings by 2020.

The 5.9 billion euro target for 2023 comes on top of the 2020 target, the company said.

At the same time, VW will create 2,000 new software jobs, as well as electronics positions in technical development, it said.

The company plans to become the world's biggest producer of electric cars by 2025, with the VW brand alone aiming to build more than 20 models on the group's electric vehicles platform.

The first electric car on the platform - the "ID" - will hit showrooms in 2020 and VW expects the launch edition to sell out, VW's board member for sales Juergen Stackmann said. VW declined to say how many cars would be produced for the launch edition.

VW will start building the ID at a factory in Zwickau, Germany, which has maximum annual production capacity of 330,000 models. Zwickau will also build electric cars for Volkswagen's Seat and Audi brands.

After Zwickau, Volkswagen will roll out production of electric vehicles to seven other factories worldwide including two plants in China and a factory in Chattanooga, United States, VW said.

© Reuters. FILE PHOTO: A Volkswagen badge on a production line at the VW plant in Wolfsburg, Germany

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.