Billion-dollar savings package: 5,000 positions will remain unfilled: VW has to tighten its belt

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There was a struggle for months, and shortly before the end of the year the news came: the savings program of the VW brand for the next three years was implemented. Approved by the company and the works council.

VW has been struggling with unprofitability for a long time. The costs are too high and there are too many models that require technical updates, but they are sold less after the transition to electric mobility. And then software issues also derailed the start of major new launches.

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With its new billion-dollar savings package, VW parent brand now wants to achieve a 6.5 percent return on sales by 2026. For comparison: sister company Porsche expects growth of at least 17 percent for 2023. Still: “This is the most comprehensive program the brand has ever created,” comments VW brand boss Thomas Schäfer (53). In the new year alone, it is expected to save 4 billion Euros by reducing personnel costs and optimizing material and production costs.

Shortened development times

Apparently knowing the details in the secret document, the German trade publication “Automobilwoche” knows exactly where the savings should be made. Development times for new VW models will be shortened from 50 months today to 36 months in the future. This is expected to save more than a billion euros by 2028. Additionally, thanks to digitalization and advanced test benches, the number of vehicle prototypes will be halved; According to “Automobilwoche” this will save approximately 400 million euros. An additional reduction of 320 million euros per year will be achieved through “increased purchasing performance”, as stated in the document. The after-sales business should bring in 250 million euros annually, and the optimization of production times should bring in another 200 million euros.

Nearly 5,000 jobs will be lost

And the VW Group wants to achieve these sporting requirements for its main brand with fewer employees. Throughout the company, early retirement and extended partial retirement opportunities are offered to those born in 1967, in return for approximately 20 percent less personnel costs. With an acceptance rate of 70 percent for those born in 1966 and 1967, around 5,000 jobs are expected to be lost in the group in the coming years. Of course, they will no longer be replaced. However, terminations are excluded until 2029.

VW boss Thomas Schäfer’s savings plans are also backed by his powerful works council, along with boss Daniela Cavallo (48). “The billion-dollar improvements currently targeted impressively demonstrate the significant levers the core brand can use to unlock greater efficiencies within our strong group of companies,” he told “Automobilwoche” about the jointly agreed cost-saving measures.

Source: Blick