BERLIN/FRANKFURT (Reuters) – Volkswagen plans to slash administrative staff costs at its namesake brand by a fifth, management told staff on Wednesday, adding this would happen via partial and early retirement as opposed to layoffs.
The target is part of Volkswagen’s push to cut costs at the VW brand by 10 billion euros ($10.8 billion) by 2026, having previously warned that high costs and low productivity were making its passenger cars uncompetitive.
Like other carmakers, Volkswagen has been hit by inflation, fierce competition from Asia as well as high labour and energy costs in Germany, requiring massive cost cuts to not fall further behind its rivals, including Tesla.
“What is crystal clear is that we will need to operate with fewer people in many areas at Volkswagen in the future,” VW brand CEO Thomas Schaefer told employees according to an internal memo seen by Reuters.
“This doesn’t mean more work for fewer people, but rather shedding old habits and saying no to duplicating efforts and inefficiencies,” he said.
Other initiatives include reducing product cycles to 3 years from 50 months, cutting overall production times as well as scrapping a planned new 800-million-euro R&D site in Wolfsburg, the memo said.
($1 = 0.9283 euros)
(Reporting by Christina Amann and Christoph Steitz; Editing by Madeline Chambers and Linda Pasquini)
