The Volkswagen brand will cut “indirect personnel costs” by 20 per cent by 2026, according to human resources director Gunnar Kilian. VW’s management are working to figure out where to find the €10bn in savings, and works council president Daniela Cavallo says negotiations are wrapping up.
The first structural lever will be that of the early and voluntary retirement of baby-boomer-aged workers, who represent the largest age group at Volkswagen. Around 3,000 people born in 1966 are already affected by partial retirement; the following two age classes are a little less numerous. In total, between 4,000 and 6,000 eliminated positions could go unreplaced, according to the German press.
Management’s objective is to boost Volkswagen’s margins from the current 3 per cent to 6 per cent, Pressure is being exerted by the volumes sold being no longer enough to fill the factories and Chinese competition becoming stiffer—particularly in the Chinese market, which accounts for 40 per cent of VW sales.
With current structures and costs, “the situation is critical,” said VW CEO Thomas Schäfer, addressing his employees at the end of November. “We are no longer competitive.” He says the purchasing department will have to improve its performance, which will increase pressure on German automobile subcontractors already in dire straits.
Volkswagen is expected to accelerate the development pace of new models, from 50 to 36 months, and have already clearly reduced their ambitions at home in Wolfsburg by abandoning their flagship “Campus Sandkamp” project, a new €800m factory dedicated to EVs.
