Crisis at the car giant

Massive job cuts: Volkswagen threatens exodus

Dark times at VW

(Bild: AFP/Ronny Hartmann)

Tens of thousands of VW employees must now fear for their jobs: According to a press report, the beleaguered Volkswagen Group intends to cut its medium-term budget significantly. The red pencil is to be applied more widely than previously communicated. 

The "Manager-Magazin" ("MM") reported on Thursday, citing its own information, that a total of up to 30,000 jobs are also under discussion in the planned austerity measures in Germany. The Group itself did not confirm this.

A spokeswoman said: "One thing is clear: Volkswagen must reduce its costs at its German sites." This is the only way the brand can earn enough money to invest in the future. "How we achieve this goal together with the employee representatives is part of the upcoming talks," she said. VW could not confirm the figure mentioned.

High costs, low sales
VW is struggling with high costs in its core brand. The car manufacturer has terminated the employment protection agreement with the trade unions in Germany, which has been in place for decades, and plant closures and compulsory redundancies are under discussion. Brand boss Thomas Schäfer wants to raise the operating return on sales to the target level of 6.5 percent in the coming years. Negotiations with the IG Metall trade union start on September 25.

The pressure is apparently so great that far-reaching cuts for employees are to be put on the table. According to "MM", hardliners believe that the number of employees in Germany should fall from 130,000 jobs by 30,000 in the medium term. Group CEO Oliver Blume also considered this to be realistic in the long term in a small circle.

His predecessor, Herbert Diess, had already met with massive resistance to ideas of job cuts of this magnitude and was forced to scrap such plans without further ado.

Department for the future could be hit hard
According to the magazine, research and development could be particularly hard hit. According to some forecasts, 4,000 to 6,000 of the 13,000 or so employees in Germany would have to take their hats off. Partial retirement and severance payments would not be sufficient measures.

As part of its investment planning, VW had already announced that it would have to spend a lot on new technology, drives, batteries and software in the years 2023 to 2024 - after that, however, the investment rate should fall again anyway. Last year, 13.5 percent of turnover in the automotive business was spent on property, plant and equipment as well as research and development, around 36.1 billion euros.

This year, CFO Antlitz has budgeted 13.5 to 14.5 percent of revenue for this purpose. Blume promised investors last year that the ratio would be below 11 percent in 2027 and even fall to around 9 percent in 2030. Investors have been complaining about the high expenses for years because they also reduce the financial scope for distributions to shareholders.