WOLFSBURG, Germany (Reuters) - Volkswagen (VOWG_p.DE) is reducing the workforce at its core division more rapidly than planned, its human resources chief said, helping the brand make progress on cost cuts needed to revive the business.
The world’s largest automaker is overhauling its biggest division by sales to generate funds to invest in electric cars and self-driving technology as it struggles to overcome its emissions-cheating scandal.
More than 7,500 workers have accepted offers of early retirement since a hard-fought turnaround plan was signed with unions last November, about 80 percent of the 9,300 pledges VW had budgeted for by 2020, group HR boss Karlheinz Blessing said in an interview with Reuters.
To stoke demand for the measure, the carmaker has restricted until July 31 an offer to workers and managers born between 1955 and 1960 to take early retirement, the executive said.
“Whoever comes later has missed an opportunity,” Blessing said. “I believe we will achieve our targets on staff reduction sooner than planned.”
Investors have said a turnaround at the VW brand, long saddled with high development and personnel costs, will be key to turn the crisis-ridden group into a more attractive business.
VW plans to raise productivity at its German plants by 7.5 percent this year and next, and a further 5 percent in 2019 and 2020, counting on fixed-cost cuts and fine-tuning of R&D, procurement and production operations.
The carmaker is seeking to raise its brand operating margin to near the upper end of a 2.5-to-3.5 percent range this year, from 1.8 percent in 2016. That’s still below profitability benchmarks at European rivals such as Peugeot Citroen (PEUP.PA) and Renault (RENA.PA).
“It’s a long way” to lastingly raise profitability, said Blessing. “2018, 2019 and 2020 will be the challenging years.”
VW is also moving fast with efforts to weed out temporary jobs. The core brand has slashed the number of temporary positions to around 2,600 now from 6,500 when the turnaround plan was launched, and aims to cut them further to around 1,000 by year-end, he said.
The carmaker has a goal to work without any temporary jobs in its home market by the end of 2020.
Management and unions have agreed to cut up to 23,000 jobs and, in return, create 9,000 new positions in the area of battery production and mobility services.
Headcount may fall further due to “natural” turnover and buyouts which VW has not yet offered, Blessing said.
“We have enough instruments to carry out the reduction in staff in a socially acceptable way.”
Reporting by Andreas Cremer and Jan Schwartz; Editing by Tom Sims and Adrian Croft