Volkswagen announces new steps for cost-cutting to save billions of euros

Volkswagen on Tuesday announced new measures for the cost-cutting drive at the VW brand that will save billions of euros for its business in the next year onwards.

The automaker said that its management and employee representatives have reached an agreement for a three-year program to ensure “future-proof and sustainable in the long-term development”.

VW announced that the new changes aim to make a contribution of 10 billion euros by 2026. The company predicts that its operating return on sales could improve to 6.6% in 2026.

The new cost-cutting drive will contribute up to 4 billion euros as early as next year. To achieve these results, Volkswagen will optimize material and product costs, reducing fixed and manufacturing costs and increasing revenues.

In terms of management, the company will reduce staff and cut personnel and labor costs. Moreover, the company will extend its partial retirement schemes to all employees born in 1967 and 1968 to reduce staff costs.

In cost-cutting program named “Accelerate Forward/Road to 6.5” aims for new Volkswagen models to be developed in 36 months reducing from 50. With this change, the company expects to save one billion euros through 2028.

The company also planned to save millions of euros in employee outcasting.

“Our efforts will in part start to bear fruit as early as 2024,” said Thomas Schafer, CEO of the Volkswagen Passenger Cars brand and Group Board Member responsible for the Core brand group.

(source – Volkswagen)