Reorganization at Volkswagen! Because the roof is still burning

Normally, automakers resort to nebulous duplicity when things aren’t going well, but Thomas Schäfer, Volkswagen’s CEO, addresses it. Things are going badly in Wolfsburg.

“We have allowed costs to be too high in many areas,” said Schäfer in the summer. That’s why he wants a spending freeze. “Everything is at stake. The roof is already on fire.”

“Volkswagen is not healthy”

“Our processes are too complex, too slow and too inflexible,” Schäfer continued. CFO Patrik Andreas Mayer even shouted: “Our automotive industry is not doing well. This is our final warning.”

According to Reuters, Volkswagen will now make significant cuts. According to internal documents, VW boss Schäfer said at a staff meeting that the company was “no longer competitive”.

Still, forced layoffs

Volkswagen is therefore planning to give older employees the opportunity to take early retirement. There would now also be forced dismissals, whereas this was previously ruled out.

Volkswagen is negotiating with the works council about a restructuring plan that should bring in 10 billion euros. For example, there should be less bureaucracy and less complexity for the manufacturer.

Fewer models and variants

This also means that the number of model variants will be reduced even further. No more long lists of versions and options. The fewer variables in the production process, the better.

Models are also destroyed, such as the Arteon. “We concentrate on a few core models,” explains Schäfer. “This reduces complexity and should give us higher profits.”

Demand for electric vehicles is disappointing

Like other manufacturers, Volkswagen is struggling with disappointing demand for electric cars. Among other things, production of the ID.3, ID.4 and ID.5 was recently temporarily stopped.

VW is also suffering from the situation in its largest market, China. Buyers are increasingly ignoring Western brands and opting for home-built cars.