Home » US Employment News » Volkswagen to cut jobs in a bid to save $4.37 billion next year

Volkswagen to cut jobs in a bid to save $4.37 billion next year

By Nithya Bose in US Employment News, posted December 20, 2023

Volkswagen has reached a deal with its workers to achieve savings of up to 4 billion euros ($4.37 billion) for its flagship brand in the coming year through workforce reduction.

The German automaker announced its intention to cut administrative staff costs at the Volkswagen brand by 20 percent.

It forms part of a broader restructuring initiative to reduce group costs by €10 billion.

The brand aims to hit a 6.5 percent profitability target by 2026 and contribute earnings of €10 billion by the same year.

In a collaborative effort with workers, Volkswagen committed to avoiding compulsory redundancies until 2029.

Instead, the brand will implement measures such as extending the partial retirement plan to employees born in 1967 and maintaining a hiring freeze.

The company clarified it has no predetermined target for the number of job reductions.

However, Volkswagen said it will undertake actions as deemed necessary to achieve the 20 percent savings goal.

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The staff reductions are scheduled to commence in January.

It will be accompanied by other measures like streamlining development times and enhancing procurement processes.

Addressing long-standing concerns over high labor costs, Volkswagen's move is regarded as a critical step in cost-cutting efforts.

Citigroup analysts stressed the need for prompt action, saying that Volkswagen "needs to act urgently."

The job cuts come amid labor union activities, as the United Auto Workers union in the US actively seeks to unionize workers at Volkswagen's Tennessee plant, advocating for improved wages.

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