The Volkswagen Group is reportedly aiming to streamline its workforce, earmarking nearly a billion euros for this purpose, according to Bloomberg. The company perceives a need to reduce bureaucracy within its organization and plans to significantly cut down on office positions. This initiative signals a shift in Volkswagen’s approach to staffing, with an emphasis on efficiency and agility.
To facilitate this reduction, Volkswagen intends to offer attractive severance packages to employees, with a severance bonus of €50,000 for those willing to resign by the end of the month. This strategy targets quick decision-makers and aims to alleviate the transition process. With such incentives, Volkswagen anticipates the departure of approximately 18,000 employees, albeit at a considerable financial cost in the short term.
The decision to downsize aligns with earlier warnings from then-CEO Herbert Diess in 2021, who highlighted the potential impact of transitioning to electric vehicles on employment, suggesting up to 30,000 jobs could be at risk. However, Bloomberg now suggests that increasing competition from China is also a driving force behind the downsizing efforts aimed at bolstering margins and ensuring the company’s competitiveness in the evolving automotive landscape.
Despite the significant financial outlay required for severance packages, Volkswagen’s CFO, Arno Antlitz, anticipates that the company will recoup these costs within a year. This strategic move underscores Volkswagen’s commitment to adapt to market dynamics, streamline operations, and position itself for long-term sustainability and profitability amidst changing industry trends and competitive pressures.
