Volkswagen is facing a deep crisis and plans to implement significant cost-cutting measures in the medium term. According to a media report, tens of thousands of jobs in Germany could be affected.
VW’s job cuts and investment reduction plans
The troubled Volkswagen Group could cut up to 30,000 jobs in Germany in the medium term, according to a press report. Additionally, Chief Financial Officer Arno Antlitz plans to reduce investments for the next five years to 160 billion euros, reported “Manager-Magazin” citing its own sources. Previously, VW had set aside 170 billion euros for its medium-term planning from 2025 to 2029.
In total, up to 30,000 jobs in Germany are under consideration as part of the targeted cost-cutting measures. A company spokesperson declined to comment on this information.
Negotiations with unions to begin next week
VW is struggling with high costs in its core VW passenger car brand. The automaker has terminated the long-standing employment security agreement with unions in Germany, putting plant closures and layoffs on the table. Brand chief Thomas Schäfer aims to raise the operating profit margin to the target level of 6.5 percent in the coming years. Negotiations with IG Metall are set to begin on September 25.
The pressure is apparently so great that far-reaching cuts to the workforce are being considered. According to “Manager Magazin”, hardliners envision reducing the number of employees in Germany from 130,000 to 100,000 in the medium term. Even CEO Oliver Blume reportedly considered this realistic in the long term when discussing it in a small group. His predecessor Herbert Diess had faced fierce resistance when contemplating job cuts of this magnitude and had to quickly abandon such plans.
Research and development hit hardest
The magazine reports that the research and development department could be particularly hard hit. Of the approximately 13,000 employees in Germany, some forecasts suggest that 4,000 to 6,000 might lose their jobs. Measures such as partial retirement and severance packages would not be sufficient to achieve these reductions.
VW had already announced as part of its investment planning that it would need to spend heavily on new technology, powertrains, batteries, and software in 2023 and 2024 – but the investment ratio was expected to decrease afterward. Last year, 13.5 percent of revenue from the automotive business was spent on property, plant, and equipment as well as research and development, totaling around 36.1 billion euros.
For this year, CFO Antlitz has budgeted 13.5 to 14.5 percent of revenue for these purposes. The ratio is expected to fall below 11 percent by 2027 and to around 9 percent by 2030, as Blume promised investors last year. Investors have been criticizing the high expenditures for years, as they also reduce the financial room for distributions to shareholders.
