Volkswagen (VW) is reportedly considering eliminating another 50,000 jobs as the German car maker fights against rising costs, intensifying Chinese competition and pressure to overhaul its manufacturing network.
VW Chief Executive Oliver Blume told employees in an internal memo that the company was assessing further workforce reductions after already agreeing to cut 50,000 positions, according to media reports.
This effectively confirms for the first time that the company is looking to reduce up to 100,000 positions, Reuters reported in this article.
Blume said Volkswagen had identified a cost disadvantage of about 20% compared with comparable companies, with personnel expenses representing about half of its overhead costs.
“Since half of our overhead costs result from personnel costs, a theoretical calculation – assuming no change in labour costs – would result in the elimination of approximately 50,000 positions worldwide,” Blume said in the memo.
“We are currently assessing across all brands, companies and regions how many adjustments are actually necessary and feasible.”
Blume described the latest restructuring effort as the most significant transformation in Volkswagen’s history, involving a broad review of operations, production capacity and the company’s model range.
“I can fully understand how deeply the current situation affects people within the company, as well as everyone in its immediate circle. I have spent my entire professional life with the group,” he said.
The company has already reduced its workforce by about 37,000 through voluntary redundancy and partial retirement arrangements under a previously agreed programme to remove 50,000 positions, which includes its Porsche and Audi subsidiaries.
Blume is trying to improve the efficiency of Europe's biggest carmaker, whose profits have slumped as it faces billions of euros in tariff costs, stiff competition in China and pressure on its German manufacturing network to become more efficient.
VW shares (ETR: VOW3) closed up €0.46 (0.65%) at €71.44 billion on Monday, valuing the company at €39.24 billion.
