Volkswagen is on the verge of announcing a massive layoff as part of the automaker’s plan to save €10 billion ($10.94 billion) and get itself back to full health in a rapidly changing automotive industry where it must contend with increasingly aggressive rivals and shifting customer tastes.
The German automaker isn’t experiencing a good time at the moment. Due to the weak demand for electric vehicles, it was forced to halt manufacturing of its EVs in Europe, is losing market share in China, and is attempting to avoid going into a price war with Tesla.
In an open and honest statement, Thomas Schaefer, the CEO of the VW brand (as opposed to the VW Group), stated at a recent staff meeting that the company’s current state of high expenses and internal inefficiencies made it “uncompetitive”. He said:
“With many of our pre-existing structures, processes, and high costs, we are no longer competitive as the Volkswagen brand.”
According to Reuters, Gunnar Kilian, a board member for human resources, stated at the same meeting that reductions in the headcount would be possible by some employees agreeing to partial or early retirement. But he also explained that the majority of the €10 billion VW wants to save won’t be clawed back through job cuts, but through other measures that will be outlined later this year.
Related: Volkswagen to Shorten New Car Development Times to Compete Against Chinese Brands
Nothing about this has happened suddenly. Volkswagen has been aware of growing issues for some time. VW managers were informed by Schaefer in June of this year that “the roof is on fire,” cautioning them that “we are letting the costs run too high in many areas.”
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