Volkswagen “no longer competitive”, says brand boss - report

Job cuts are planned at the Volkswagen brand as its boss has conceded it’s falling behind rivals.

“With many of our pre-existing structures, processes and high costs, we are no longer competitive as the Volkswagen brand,” Volkswagen brand chief Thomas Schäfer said in a staff meeting on Monday, per a report from Reuters.

The Volkswagen Group is embarking on a €10 billion (A$16.54bn) savings program, which it is currently negotiating with its works council, and managers reportedly told staff this week the cuts will include staff reductions.

Volkswagen had previously said it wanted to take advantage of the “demographic curve” to shrink its workforce, and that it wouldn’t cut jobs until 2029.

Now, it’s reportedly looking at offering partial or early retirement to an unspecified number of workers.

The bulk of the €10 billion savings program, according to human resources board member Gunnar Kilian, will be achieved through measures other than job cuts. More details will reportedly come before year’s end.

“We need to finally be brave and honest enough to throw things overboard that are being duplicated within the company or are simply ballast we don’t need for good results,” Mr Kilian is quoted as saying in Monday’s staff meeting.

Volkswagen is continuing an aggressive rollout of electric vehicles (EVs), having rolled out a full range of ID-badged vehicles on its dedicated MEB architecture.

This rollout has been bumpy of late, with production pauses at its German EV plants, plus recent reports suggesting the company plans to cut hundreds of jobs at the Zwickau plant that produces the Volkswagen ID.4 and ID.5, Cupra Born and Audi Q4 e-tron.

It also reportedly plans to cut 2000 jobs at its troubled Cariad software division, and end vehicle production at its Transparent Factory that produces the ID.3.

Nevertheless, it’s turning to new platforms: MEB Entry, set to underpin entry-level EVs for Europe like the production version of the ID.2all concept; and A Small Architecture, a new platform to host more affordable EVs in China.

The Volkswagen brand confirmed earlier this year it wants to roll out these cost cuts by 2026, with the aim of effectively doubling its profitability to 6.5 per cent.

It has already made some cuts to reduce complexity, discontinuing the lower-volume Arteon and confirming it plans to offer fewer configurations of its surviving vehicles.

It has also confirmed it plans to more closely align production of both its passenger and commercial vehicles with Seat, Cupra and Skoda.