Workforce cut possible at ‘no longer competitive’ Volkswagen

German car giant Volkswagen said that it was considering staff reductions, possibly in the form of early retirement, to help it meet vital cost-cutting targets imposed in its sputtering transition to electromobility.

Drastic changes

“The situation is critical. Many markets are under pressure. Our orders, particularly for electric vehicles, have been lower than expected,” Thomas Schaefer, head of the Volkswagen brand, told a staff meeting at the carmaker’s headquarters in Wolfsburg.

“It is clear: the status quo will not be enough. It will not work without significant cuts. We must address critical issues, including personnel,” he said.

This could include taking advantage of the “demographic curve”, a company spokesperson told AFP, typically understood as offering early retirement or not replacing staff who have retired.

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Volkswagen is pouring tens of billions of euros into its pivot to electric vehicles, but the sector has been blighted by a weak global economy and low levels of demand.

Group CEO Oliver Blume in June announced a 10-billion-euro savings programme to help the carmaker increase profitability.

The group was “no longer competitive” in its current form, Schaefer said, calling on the unions to accept “personnel” measures applying from next year.

“It is to be expected that in many areas there will be fewer staff,” added human resources board member Gunnar Kilian.

In September, Volkswagen said it was cutting 269 temporary jobs at its flagship electric car plant in Zwickau.

The 10 brand group, whose marques include Audi, Seat and Skoda, is facing tough competition in the electric vehicle sector, particularly in key market China.

South Africa an additional worry

At the same time, the marque also expressed concern about its operations in South Africa due to ongoing power cuts, logistical challenges related to dilapidated rail infrastructure, and lack of government support for new energy vehicles.

“Eventually you have to say, why are we building cars in a less competitive factory somewhere far away from the real market where the consumption is?” I’m very worried about it. We’re not in the business of charity,” Schafer was quoted by Reuters as saying following a visit to the country last week.

At Volkswagen South Africa’s year-end function on Tuesday, Managing Director Martina Biene remarked that while the automaker won’t be leaving the country anytime soon, its suitability as an export hub to other markets, will most likely be looked over if no immediate changes are implemented.

“Given that that there is also an electric future for Europe as well as regions like China and the US, the company has to consider all aspects of investment and South Africa at this point in time doesn’t make it easy as an investment destination,” IOL Motoring quoted her as saying.

Additional information by Charl Bosch

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