VW unveils rescue plan

Source: Xinhua | 2019-03-14

Volkswagen will cut up to 7,000 positions, aim to boost productivity and deliver 5.9 billion euros (US$6.7 billion) of annual savings at its core VW brand by 2023, in its latest attempt to raise profitability at its top-selling division.

The plan, announced yesterday, comes a day after the German automaker warned it would cut jobs as it speeds up the rollout of electric cars, which are less complex to build and require fewer workers.

Volkswagen has struggled to raise profitability for the VW brand for years. Last year, the brand’s operating margin fell to 3.8 percent, lagging peers such as Peugeot which delivered a margin of 8.4 percent.

The VW brand is targeting a 6 percent margin in 2022.

Volkswagen has ruled out compulsory layoffs until 2025, but early retirement of staff working in administrative positions at the company’s headquarters in Wolfsburg, Germany, will help reduce the workforce by 5,000 to 7,000, it said.

The new cost-cutting drive is a continuation of Volkswagen’s 3-billion-euro Zukunftspakt savings plan. So far, VW has realized around 2.4 billion euros of the planned 3-billion annual cost savings by 2020.

The 5.9-billion-euro target for 2023 comes on top of the 2020 target. At the same time, VW will create 2,000 new software and electronics technical development jobs.