High costs and low productivity have reportedly made the brand Volkswagen financially incompetitive. Meanwhile, the parent company, VW Group —which owns Audi, Porsche and the original Volkswagen brand — is shifting focus to producing electric cars. As part of this transition, the Group is seriously embracing cost-cutting measures — a $10.9 billion savings programme, which will entail among several other measures, reduction in headcount, including managers, via partial or premature retirement agreements.
It is reported that the VW brand posted maximum sales but the lower operating profit margin in the first quarter of this year.
Over the next three years, the VW Group wishes to take the return on sales up from 3.6 per cent in 2022 to 6.5 per cent. The Group endeavours to ensure that all its mainstream brands do well and also ensure that they are differentiated better, even while reducing unnecessary expenditure. It also seeks to do away with redundancies and get rid of all the unwanted processes. Negotiations are already underway with its works council regarding the same with the aim of becoming a more efficient organisation.
Its huge workforce has the protection of the powerful unions as well as its own works council, comprising elected staff representatives who negotiate with the management.
It is pertinent to mention here that the works council had said the Group would cut costs without axing jobs. The works council intends to make VW keep its word on that front and ensure that jobs are secure for the next six years.
