Volkswagen and its labour unions agreed to cut 30,000 jobs at the core VW brand in exchange for a commitment to avoid forced redundancies in Germany until 2025, a compromise which leaves the carmaker’s profitability still lagging rivals. The turnaround plan announced last Friday will lead to 3.7 billion euros ($3.9 billion) in annual savings by 2020 and lift the Volkswagen (VW) brand’s operating margin to 4 percent that year, from an expected 2 percent in 2016. That target still remains below rival European carmakers such as Renault and Peugeot Citroen, which are targeting an operating margin of 6 percent in 2021.
VW, Europe’s largest carmaker, is seeking to move beyond an emissions-cheating scandal that has tarnished its image and left it facing billions of euros in fines and settlements. The cuts came with a management pledge to create 9,000 new jobs in the area of battery production and mobility services at factories in Germany as part of efforts to shift toward electric and self-driving cars.
“We have to invest billions of euros in new cars and services while new rivals will attack us – the transformation will surely be more radical than everything we have experienced to date,” VW brand CEO Herbert Diess said at a press conference. Jobs will also be cut in North America, Brazil and Argentina, VW said, without being more specific. Around 120,000 employees work for VW brand in Germany including 6,000 temporary staff.
In a further sign of its shifting focus, VW said it would build electric cars at its German factories in Zwickau and Wolfsburg. Electric motors will be built in Kassel, and VW will start battery cell production and development in Salzgitter. Volkswagen will also build battery packs for electric and hybrid cars in Braunschweig, it said.
