VW To Lay Off Up To 7,000 Employees Via Early Retirement

Mae Love
March 13, 2019

German automaker Volkswagen say it will eliminate up to 7,000 jobs by 2023.

The profit margin at its core VW brand slipped to 3.8% past year, down from 4.2%, as higher investments into electric cars and challenges getting combustion-engined vehicles certified ate into profits. It is estimated that 11,000 Volkswagen employees will be eligible for retirement in 2019. "Restructuring along the demographic curve is therefore possible", Volkswagen said in a statement. VW is confident it can get close to its targeted 7,000 job cuts by offering early retirement and simply not restaffing vacant positions.

At the VW brand, executives aim to lift their profit margin to 6.0 percent by 2022, compared with 3.8 percent a year ago.

Even as some positions are cut, bosses expect to create 2,000 new jobs in electronics and software development to shape the firm's reorientation, and said they would uphold a job security guarantee valid until 2025. To do that, the carmaker will reduce the number of model variants and material costs.

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The carmaker's Audi and Porsche brands made up the lion's share of VW Group's operating profit. Furthermore, the company targets a 5 percent yearly increase in productivity at its plants, as well as a stronger focus on process digitalization.

Ralf Brandstätter, Volkswagen's chief operating officer, said that the company needed to "do more to meet the challenges" the company is facing in the upcoming years, adding that the changes would make Volkswagen "fit for the electric and digital era".

"Initial constructive talks with the Works Council on the planned implementation of the digitalization roadmap in the administrative areas of the company have already taken place", the executive added.

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