Time Is Running Out! VW Plans to Step on the Gas When It Comes to Cost-Cutting for Its Core Brand

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Volkswagen has absolutely no time to lose and will therefore further accelerate its performance program, said Thomas Schäfer, head of the VW brand, at a staff meeting in Wolfsburg (Germany)...

Thomas Schäfer would have liked the measures agreed upon in 2024 to be sufficient on their own. But they aren’t. And looking the other way doesn’t solve any problems either. Schäfer added in Wolfsburg (Germany): “We will now discuss the details with the works council.” The agreement reached at the end of 2024 had three priorities: to reduce overcapacity at German locations, to lower labor costs, and to bring development costs down to a competitive level. Good progress has also been made within the Volkswagen brand. In terms of workforce reduction, some 16,300 departures have been completed in Germany, and a total of just under 28,800 have been firmly agreed upon through 2030. The core brand’s target in Germany is a reduction of 35,000 jobs, which is to be achieved by 2030.

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Works council chair Daniela Cavallo expects the cost-cutting measures to become even more severe. At the company level, she said, the workforce will face the company’s cost-cutting frenzy at every turn in the coming weeks. “Even more than it already is, I’m afraid,” Cavallo commented, according to participants at the works council meeting. The signs point to a storm—and it won’t be a small one! Cavallo also acknowledged, however, that things cannot continue this way at VW. “Most of our previous profitability is gone. That’s the plain truth,” she, too, must admit. She believes that manufacturers with a long tradition will fall by the wayside. Others will have to merge. And still others will form alliances they would never have considered in the past, as Cavallo predicts. So the question isn’t whether new burdens will fall on employees, but rather how to distribute them fairly and prevent the situation from becoming unfair to the workforce.

VW recently updated its profit forecast—citing, among other things, write-downs in the billions related to Porsche, problems in China, and higher demand for electric cars. The company earns less from these vehicles than from comparable internal-combustion models, even though they are selling well in Europe. Cavallo, for his part, also addressed—according to dpa reports—the plans of the Executive Board led by VW CEO Oliver Blume to cut another 50,000 jobs worldwide—about half of which would be in Germany across the entire group. It is questionable whether such a large-scale job cut could still be implemented in a socially responsible manner. This cannot be achieved through early retirement and severance agreements alone. According to Cavallo, this raises questions such as: Is the Executive Board planning layoffs for operational reasons after all? And even if so, how does it intend to implement them? The employment protection agreement at Volkswagen AG is valid until the end of 2030 and, moreover, cannot be terminated.

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