Volkswagen's Brand Boss Seeks Significant Cost Savings
In an informal chat, Volkswagen Group HR Director Gunnar Kilian revealed that the automaker is planning substantial cost reductions, particularly in the administrative sector. As per reports in the "Handelsblatt" newspaper, Thomas Schäfer, the brand boss at Volkswolfseugen, set a goal of reducing personnel expenses by a fifth in the indirect division. This sector encompasses around 40,000 administrative employees within the brand and group at Wolfsburg. Kilian stressed that the cuts were aimed at costs, not jobs. However, a group spokesperson remained tight-lipped about further details.
No Reduction in Job Security
The company spokesperson ensured that all cost-related matters related to Volkswagen's strategic plans would be thoroughly scrutinized. They also acknowledged the use of tools to aid employees through the demographic curve, such as voluntary partial retirement, without specifying a target number of departures. The works council also declined to comment on rumors, maintaining that they wouldn't comment on confidential negotiations or the future timeline. They reiterated their opposition to collective wage cuts or compromising job security.
Schäfer Pursues Profit Improvement
Thomas Schäfer intends to boost profits for Volkswagen's chronically underperforming passenger car division. By 2026, Schäfer aims to secure an additional 10 billion euros, elevating the targeted return on sales to 6.5%, up from the current 3.4% in the first nine months of 2023. Previously, Schäfer had hinted at savings through collaborative production within the "Core" brand group, which includes Volkswagen Passenger Cars, Seat/Cupra, Skoda, and Volkswagen Commercial Vehicles (VWN).
Details of the Cost-Cutting Programme are Under Wraps
At present, the specifics of Volkswagen's cost reduction strategy remain undisclosed. Talks with employee representatives are expected to continue into the following year. While measures for 2024 have been established, plans for future years are yet to be finalized.
Schäfer's Drive for Administrative Cost Reduction
In an effort to optimize operations, Thomas Schäfer, as Volkswagen's brand head, is targeting a 20% reduction in administrative expense personnel costs in the indirect division.
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Enrichment Insights:
- Despite no explicit mention of a 20% reduction in indirect personnel costs, Volkswagen's broader cost-cutting measures aim to contain expenses by numerous means.
- The company plans to shedd approximately 35,000 jobs through voluntary departures by 2030.
- Production capacity reduction, relocation, and modern production processes contribute to the €15 billion annual savings plan.
- Volkswagen seeks to avoid involuntary layoffs by encouraging voluntary departures until 2030.
