Thomas Schaefer, chief executive of the Volkswagen brand of Germany's Volkswagen Group, told employees at a meeting that Volkswagen-branded cars were uncompetitive due to high costs and declining productivity, according to media reports. To cut costs, the Volkswagen brand plans to cut jobs to boost the company's financial outlook. Volkswagen Group is currently in negotiations with the labor committee on the staff reduction plan for the Volkswagen brand, and the specific layoffs will be initially announced on December 6.
Thomas Schafer said 2024 will be a difficult year for Volkswagen because several markets are under heavy pressure and electric car orders are not as expected. In the past, there was not enough capital to operate without deep cost cuts. Industry insiders believe that rising inflation and interest rates and cuts in subsidies for electric cars in Germany have led to weak demand for electric cars in Europe, which is also the main reason why Volkswagen-branded electric cars are in trouble. The planned layoffs are also interpreted by the outside world as the first step for Volkswagen to improve efficiency in the process of electric vehicle transformation.
As of press time, Volkswagen officials did not respond to the news.
As early as June this year, Volkswagen launched a new cost-cutting plan. Under the plan, the Volkswagen brand aims to increase the return on sales to 6.5% and increase revenue by about 10 billion euros by 2026.
It is worth mentioning that this is not the first time Volkswagen has mentioned layoffs. In June, Volkswagen CEO Oliver Blume said it planned to carry out a large-scale restructuring of Volkswagen, the first step in the restructuring is to cut costs to boost the group's overall profits. At the same time, the top management of Volkswagen also wants to restructure the group and may involve layoffs. One senior executive called it "the biggest restructuring in decades".
Then, in September, Volkswagen considered a round of layoffs at its Zwickau plant in the eastern German city because of weak demand for electric vehicles. The contracts of nearly 300 employees will expire at the end of October, when Volkswagen may tell them to leave and not renew their contracts. The fate of about 2000 temporary workers is uncertain. In addition, Volkswagen plans to cut 2000 jobs at Cariad, its software division, earlier this month.
According to the official website, Volkswagen Group, founded in 1938 and headquartered in Wolfsburg, Germany, is the largest car company in Europe and one of the first foreign car companies to enter the Chinese car market. it owns Volkswagen, Audi, Skoda, Porsche and other well-known brands.
Among them, the Volkswagen brand is the revenue pillar of the Volkswagen Group, and it is also the brand with the highest cumulative sales in the group, but it is the "most slow-down" brand in the Volkswagen Group in terms of profit. Data show that Volkswagen brand sales in the first three months of this year are much higher than other Volkswagen group mainstream brands, including Skoda and Seattle, but the operating profit margin is the lowest among the group's brands.
Although Volkswagen Group is a relatively positive brand of electric transformation among many multinational car companies, Volkswagen sales are not optimistic compared with the current main electric car brands. According to the data, Volkswagen sold 4.56 million vehicles worldwide in 2022, of which electric vehicle delivery increased by 23.6% year on year to 330000. For comparison, Tesla sold 1.3143 million vehicles worldwide in 2022, of which 439000 were sold in China, while BYD sold 1.8635 million.
Volkswagen has said its phased goal is to produce 1 million electric vehicles a year by 2023, but according to data analysis, Volkswagen is still a long way from that goal.
Since 2023, Volkswagen has begun to accelerate the process of electrification, especially in the Chinese market. In April this year, Volkswagen Group announced that it would invest 1 billion euros to set up a new company in China, and in May, Volkswagen Anhui announced that it would continue to invest in Hefei, Anhui Province, with a total investment of 23.1 billion yuan. On the 24th of this month, Volkswagen China officially announced that it would launch a new electric vehicle platform designed specifically for the Chinese market within three years. The development cycle of the new platform is 36 months, about 1/3 shorter than the previous platform development cycle of Volkswagen Group. It is understood that Volkswagen Group plans to launch 140000-170000 yuan of Volkswagen A-class entry-level pure electric models in China within 36 months, so as to deepen the Chinese market. Earlier, Ralf Brandstaetter, chief executive of Volkswagen Group in China, said in an interview: "Volkswagen Group will continue to invest in China, otherwise it will lose competition in three years' time."
At present, Volkswagen Group is in a critical period of electrification transformation, and it is planned that Volkswagen Group's brands, including Volkswagen and Audi, will offer more than 30 pure electric models in China by 2030. It should be noted that with the great changes taking place in the global car market, the competition in the new energy track is particularly fierce. Volkswagen Group, as one of the established car companies in the world, is not only facing a difficult period of electrified transformation. it is also faced with external shocks from Tesla and China's new energy vehicles, which also means that there is not much time left for Volkswagen to "transform".
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