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Volkswagen is laying off thousands of workers in order to cut costs, citing low productivity

Volkswagen is laying off thousands of workers in order to cut costs, citing low productivity.

Volkswagen is reportedly financially uncompetitive due to high costs and low productivity. Meanwhile, VW Group, which owns Audi, Porsche, and the original Volkswagen brand, is shifting its focus to the production of electric vehicles. As part of this transition, the Group is aggressively pursuing cost-cutting measures, including a $10.9 billion savings programme that will include, among other things, a reduction in headcount, including managers, through partial or premature retirement agreements.

According to reports, the VW brand had the highest sales but the lowest operating profit margin in the first quarter of this year.

The VW Group intends to increase its return on sales from 3.6 percent in 2022 to 6.5 percent over the next three years. The Group strives to ensure that all of its mainstream brands perform well and are better differentiated, all while reducing unnecessary spending. It also aims to eliminate redundancies and eliminate all unnecessary processes. Negotiations with its works council are already underway with the goal of becoming a more efficient organisation.

Its massive workforce is protected by powerful unions as well as its own works council, which is made up of elected staff representatives who negotiate with management.

It is worth noting that the works council stated that the Group would cut costs without eliminating jobs. The works council intends to force VW to keep its word and ensure job security for the next six years.

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