Correction: An earlier version of this story conflated VW Group employees with VW brand employees; only the latter faces these staff cuts. We regret the error.
Volkswagen’s woes are taking turns for a place under the spotlight. After pausing production at some of its electric vehicle factories in Europe citing weak demand and the brand’s CEO saying that it was “no longer competitive,” the people’s car manufacturer has released more details about the parent group's $10.8 billion savings plan that should put it back on track.
According to Automotive News Europe, citing an internal memo, the VW brand plans to cut administrative staff costs by a fifth. Last year, the German car group that bears the same name had 675,000 employees worldwide.
Volkswagen said it will not resort to layoffs. Instead, the staffing cuts will happen by way of partial and early retirement, the internal memo mentioned.
Besides the restructuring, VW will reduce the product cycles from 50 months or a little over four years to just three years. This means we should see facelifted and new-generation models one year earlier during their lifetime. Furthermore, a planned $862 million (€800 million) research and development site in Wolfsburg, Germany will no longer be built.
In the previous decade, Volkswagen produced about 780,000 cars on average per year at its plant in Wolfsburg. By comparison, this year the company hopes to achieve 500,000 units, which is far below its previous achievements. "At the end of November, after 11 out of 12 months, we have produced 453,000 vehicles," works council head Daniela Cavallo said for Automotive News Europe.
"We will need to operate with fewer people in many areas at Volkswagen in the future," brand boss Thomas Schaefer told employees at a meeting in Wolfsburg on Wednesday. "This doesn't mean more work for fewer people, but rather shedding old habits and saying no to duplicating efforts and inefficiencies,” he added.
