Volkswagen to lay off approximately 20,000 workers
Volkswagen Slashes Costs: The Inside Scoop
Volkswagen (VW) is slashing costs in a big way, with around 20,000 employees already agreeing to leave prematurely, according to Bild reports. Here are the nitty-gritty details.
Personnel Exodus
The exit package? A significant portion of the departing workforce (two-thirds, to be exact) are opting for partial retirement, while the remaining third will be offered severance packages. This cost-cutting strategy is expected to save VW a whopping €1.5 billion in personnel costs annually.
Voluntary Departures
These departures are part of VW's wider cost-cutting program, agreed upon by the company's board and the IG Metall industrial union at the end of last year. By 2030, a total of 35,000 jobs will be axed, primarily from German plants. All these departing workers will receive the agreed-upon severance payments.
The (Huge) Payoff
Layout workers aren't walking away empty-handed. They're entitled to severance pay, with the exact amount depending on their length of service, potentially reaching up to €400,000. But that's not all - VW is also reducing the number of annual internships from 1,400 to 600.
Beyond the Workforce
Around 130,000 VW employees have agreed to a wage freeze and increased vacation allowances have been canceled, further contributing to the cost-cutting efforts.
The Bigger Picture
These personnel cost reductions are designed to prevent VW plant closures. In response to declining car sales on the European market, VW has considered closing three German plants, leading to mass protests by workers.
Tough Times Ahead
VW's financial director, Arno Antlitz, has stated that by 2024, the company might be selling only 14 million cars a year compared to 16 million in 2019. The company blames its financial woes on Donald Trump's import tariffs and the expansion of Chinese automakers and electric vehicles.
The company first announced its intentions to close part of its production in September 2024, with the potential impact on plants in Osnabrück and Dresden. However, these radical measures are necessary due to the fall in demand from buyers and the transition to electric vehicles.
Meanwhile, in Russia, Volkswagen cars remain popular despite the brand's full withdrawal three years ago. People continue to buy them through parallel imports, despite the lack of spare parts at dealerships and the significant price increase.
In the past, DK.RU has reported on Volkswagen-related news such as the seizure of the Porsche Moscow showroom due to Volkswagen's debts to "GAZ Group" and potential future returns of German automakers to Russia if sanctions are lifted. Stay tuned for more updates on this developing story.
The cost-cutting strategy at Volkswagen (VW) extends beyond personnel, affecting areas such as the automotive industry's internship program, with the number of annual internships reducing from 1,400 to 600. This cost analysis is crucial not just for the finance sector but also for transportation, as VW's financial director, Arno Antlitz, anticipates selling only 14 million cars a year by 2024 compared to 16 million in 2019. These changes are a response to challenges faced by the industry, including declining car sales on the European market and the expansion of Chinese automakers and electric vehicles.
