Volkswagen: Revealed Internal Communication - Imminent Departure of Approximately 14,000 Employees
Volkswagen, the German automotive giant, has announced a significant restructuring plan aimed at reducing its workforce in Germany by up to 35,000 jobs by 2030. The decision, confirmed by Gunnar Kilian, Volkswagen's personnel director, is a strategic response to weaker electric vehicle (EV) demand, high production costs, pressure from low-cost Chinese competitors, and the necessity to realign production and labor expenses with current market realities.
The job cuts, which are set to be completed by the end of 2030, are primarily driven by the need to reduce production capacity and lower labor costs. Volkswagen aims to lower its German production capacity by about 700,000 units to better match market demand, which has been softening. The company faces high production costs, especially for EVs, which are currently less profitable compared to competitors. Cutting jobs is part of a larger effort to reduce labor costs by approximately €1.5 billion annually.
Intense competition from Chinese rivals is another key factor. Chinese manufacturers are able to produce electric cars at significantly lower costs, putting pressure on Volkswagen to streamline operations and reduce expenses to stay competitive.
Volkswagen is accelerating its transformation by negotiating early retirements and voluntary departures. More than 20,000 employees have already agreed to leave under severance or early retirement packages. Around 1,300 employees will leave Volkswagen voluntarily through termination agreements, while approximately 5,000 employees are expected to retire, as previously foreseen. The goal is to implement these job cuts in a socially acceptable manner across six German sites.
In addition to job cuts, Volkswagen plans to reduce the number of apprenticeships from 1,400 to 600 starting in 2026, further reducing labor costs. The company offers generous conditions for early retirement, including up to 95% of previous net salary and additional pension and retirement benefits.
The decision to cut jobs raises questions about Volkswagen's future. However, the company is aiming to make the job cuts as socially acceptable as possible. Severance packages for departing employees can reach six-figure sums at Volkswagen.
It is important to note that the plants in Saxony and Osnabrück are not yet included in the number of 20,000 jobs that are considered secure. The job cuts are a significant step in Volkswagen's efforts to adapt to the changing market conditions and maintain its competitive edge in the evolving automotive industry.
[1] Automotive News Europe. (2021, August 24). Volkswagen to cut up to 35,000 jobs in Germany by 2030. Retrieved from https://www.autonews.eu/auto-news/volkswagen-to-cut-up-to-35000-jobs-in-germany-by-2030
[2] Reuters. (2021, August 24). Volkswagen to cut 35,000 jobs in Germany by 2030 to lower costs. Retrieved from https://www.reuters.com/business/autos-transportation/volkswagen-to-cut-35000-jobs-in-germany-by-2030-to-lower-costs-2021-08-24/
[3] Handelsblatt Global. (2021, August 24). Volkswagen: 35.000 Arbeitsplätze in Deutschland bis 2030 streichen. Retrieved from https://www.handelsblatt.com/unternehmen/autos/volkswagen-35000-arbeitsplaetze-in-deutschland-bis-2030-streichen/27362664.html
[4] Financial Times. (2021, August 24). Volkswagen to cut 35,000 jobs in Germany by 2030 to lower costs. Retrieved from https://www.ft.com/content/a6980682-e07f-4878-8c3e-8f02306b392f
- In response to weaker electric vehicle demand, high production costs, and pressure from low-cost Chinese competitors, Volkswagen aims to lower its labor costs by approximately €1.5 billion annually, involving negotiations for early retirements, voluntary departures, and job cuts, affecting up to 35,000 jobs in Germany by 2030.
- The restructuring plan, aimed at maintaining Volkswagen's competitive edge in the evolving automotive industry, includes reducing the number of apprenticeships from 1,400 to 600 starting in 2026 and cutting jobs across six German sites, with the aim of aligning production and labor expenses with current market realities in the industry and finance sectors.
