Volkswagen, grappling with a market shift towards electric vehicles (EVs), has declared additional job cuts to address competitiveness issues. Thomas Shafer, CEO of VW brand cars, bluntly stated during a Monday staff meeting, “We are no longer competitive.”
The German automaker, recognizing the dominance of EV leaders like Tesla, is taking decisive steps to realign its operations. Shafer pinpointed existing structures, processes, and high costs as factors contributing to the Volkswagen brand’s competitiveness struggle. He noted that the combination of high costs and low productivity has led to cars facing challenges in the market.
In response, Volkswagen launched a new cost-cutting program in June, with a targeted savings goal of 10 billion euros ($10.9B) by 2026. The focus is on optimizing costs and improving returns to enhance the brand’s position in the rapidly changing automotive landscape.
Oliver Blume, CEO of Volkswagen Group, aims to significantly increase VW brand returns to 6.5% over the next three years, up from the current level of around 3.6%. The company is strategically repositioning itself to adapt to the evolving demands of the industry, particularly the accelerating transition to electric mobility.
Gunnar Kilian, a member of the HR board at Volkswagen, outlined plans to leverage the “demographic curve” for staff reduction, including options like early or partial retirement. Kilian stressed the importance of a candid assessment of internal processes, stating, “We need to finally be brave and honest enough to throw things overboard that are being duplicated within the company or are simply ballast we don’t need for good results.”
While job cuts are part of the comprehensive strategy, Volkswagen asserts that the majority of savings will come from areas beyond workforce reduction. Further details on the holistic cost-cutting plan are expected to be outlined by the end of the year, as Volkswagen navigates the competitive landscape amid the industry’s accelerating shift toward electric mobility.
