Volkswagen Group is targeting about €3.7 billion of cost cuts at its core VW brand by 2021 as it wrestles with labor leaders over a turnaround plan.
The targeted savings would be in addition to a €5 billion efficiency program announced by VW in 2014, of which about €2.5 billion have already been realized,
About €3 billion of cost cuts would affect VW’s operations in Germany, the sources said. Talks between brand management and labor leaders over a so-called future pact are faltering with investment pledges and cost savings proving stumbling blocks, the sources said.
Labor leaders have told workers that they are not close to an agreement with management on cost cuts and strategy for the VW brand. “A collapse of the future pact continues to be possible because we are still lacking essential commitments from the company,” VW works council said in a letter distributed to German staff today.
Talks between labor and management over the so-called future pact will resume later today, after labor leaders have briefed workers at a staff gathering at the automaker’s headquarters in Wolfsburg, Germany.
Both sides agree that the VW marque must “reinvent itself” to be competitive in the long run, the company’s management and works council said on Wednesday in a joint internal memo distributed to employees.
Reviving profit at VW Group’s largest division is a cornerstone of the automaker’s effort to emerge from its diesel-emissions scandal while planning billions of euros in investments for electric cars with new digital features.
