Volkswagen to cut 30,000 jobs

Fri Nov 18, 2016 10:13am EST
 
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By Andreas Cremer and Jan Schwartz

WOLFSBURG, Germany (Reuters) - Volkswagen (VOWG_p.DE: Quote) and its labor unions agreed to cut 30,000 jobs at the core VW brand in exchange for a commitment to avoid forced redundancies in Germany until 2025, a compromise which leaves the carmaker's profitability still lagging rivals.

The turnaround plan announced on Friday will lead to 3.7 billion euros ($3.9 billion) in annual savings by 2020 and lift the Volkswagen (VW) brand's operating margin to 4 percent that year, from an expected 2 percent in 2016.

That target still remains below rival European carmakers such as Renault (RENA.PA: Quote) and Peugeot Citroen (PEUP.PA: Quote), which is targeting an operating margin of 6 percent in 2021.

VW, Europe's largest carmaker, is seeking to move beyond an emissions-cheating scandal that has tarnished its image and left it facing billions of euros in fines and settlements.

The cuts came with a management pledge to create 9,000 new jobs in the area of battery production and mobility services at factories in Germany as part of efforts to shift toward electric and self-driving cars.

"We have to invest billions of euros in new cars and services while new rivals will attack us - the transformation will surely be more radical than everything we have experienced to date," VW brand CEO Herbert Diess said at a press conference.

DEEP ENOUGH?   Continued...

 
New Volkswagen models Golf Cabriolet and Passat are stored at the 'CarTowers' in the theme park 'Autostadt' next to the Volkswagen plant in Wolfsburg March 9, 2011. REUTERS/Christian Charisius/File Photo