Reversal of previous promises! Volkswagen plans layoffs! High-level warning: The Volkswagen brand is losing its competitiveness

Reversal of previous promises! Volkswagen plans layoffs! High-level warning: The Volkswagen brand is losing its competitiveness

Every reporter: Miao Shiyu Every editor: Fan Wenqing

The rapid development of the "New Four Modernizations" transformation of the automotive industry has made it particularly difficult for fuel giants to "turn around".

A few days ago, Reuters reported that on November 27, local time, the management of Volkswagen Group issued a warning at a staff meeting, "High cost, low productivity, Volkswagen's original brand is losing competitiveness." "At the meeting, the top management of the Volkswagen Group said that without significant cuts [in costs], there would not be enough capital to operate, and that many crucial issues, including personnel, would have to be dealt with.

According to reports, Volkswagen is currently negotiating with the Works Council on a cost-cutting plan for its Volkswagen brand in the face of pressure to "reduce costs and increase efficiency", which is a step to improve efficiency in the group's transition to electrification. In response to the specific situation, on November 29, the reporter of "Daily Economic News" also contacted relevant people in China of Volkswagen Group, but there was no response as of press time.

Cost-cutting plans to lay off employees

Reuters reported that at the meeting on November 27, the Volkswagen Group reversed its previous commitment to "no layoffs until 2029". Due to the decline in car orders and increasing cost pressures, Volkswagen Group executives said at an internal meeting that the company will achieve layoffs through a partial retirement or early retirement agreement.

Reversal of previous promises! Volkswagen plans layoffs! High-level warning: The Volkswagen brand is losing its competitiveness

Image source: Photo by reporter Li Xing

It is reported that in June 2023, the Volkswagen Group announced a 10 billion euro (about 10.9 billion US dollars) cost reduction plan, aiming to increase the return on sales to 6.5%, as the first step in the electrification transformation to improve efficiency. According to the 2022 annual report, the Volkswagen Group's return on operating sales was around 3.6%.

At the time, the Volkswagen Group planned to use the natural "demographic curve" to reduce the number of employees and promised no layoffs until 2029. But at the Nov. 27 meeting, Volkswagen Group management said that most of the €10 billion cost reduction target would be achieved through measures other than layoffs, with details to be determined by the end of the year.

According to the tracking report of the reporter of "Daily Economic News", there have been frequent strategic and personnel shocks in the Volkswagen Group recently. Recently, the Volkswagen Group plans to reduce the cost of administrative staff due to cost pressure, and the construction of a plant in Europe has been postponed due to the slowdown in demand for overseas orders. Previously, the Volkswagen Group planned to lay off 2,000 employees at its software subsidiary, CARIAD, accounting for about 30% of the total workforce.

Strategic transformation is accelerating

Faced with the pressure of "reducing costs and increasing efficiency", the Volkswagen Group is accelerating its strategic transformation. Among them, the Volkswagen Group focuses on the "In China, For China" solution. It is reported that the Volkswagen Group has built the largest R&D center outside Germany in China, which will improve profitability and competitiveness through 100% local development, and will save about 30% of costs.

The reporter learned from the Volkswagen Group that Volkswagen (China) Technology Co., Ltd., which was established in China, will make independent decisions in the future, and the process will save communication costs with the German headquarters. Volkswagen Group's managing director in charge of China business, Richard Braid, told reporters that Volkswagen's layout in Hefei will become an important interface for connecting joint ventures and local partners, improving efficiency, accelerating development, and optimizing the cost structure. On November 24, Volkswagen Group China announced that the Volkswagen Group will launch an electric vehicle platform for the entry-level market within three years.

Reversal of previous promises! Volkswagen plans layoffs! High-level warning: The Volkswagen brand is losing its competitiveness

Image source: Sina Weibo (@大众中国)

In fact, in the face of the rapid development of the new energy market in China, according to the reporter's incomplete statistics, there are currently Honda, Nissan and other fuel car companies to accelerate the transformation of the "new four modernizations" in China.

Yan Jinghui, a member of the expert committee of the China Automobile Dealers Association, said in an interview with the reporter of the "Daily Economic News" that the layout of traditional fuel car companies and foreign-funded car companies in the Chinese market is inseparable from the rapid development of China's new energy vehicle market.

According to statistics from the China Association of Automobile Manufacturers, China's new energy vehicle sales have maintained rapid growth, reaching 6.887 million units in 2022, a year-on-year increase of 93.4%, and maintaining the world's first place for eight consecutive years. It is expected that by 2026, China's new energy vehicle sales will reach 14.44 million units. In the future, there will be a huge increase in the new energy vehicle market.

However, Yan Jinghui reminded that fuel car companies to the "new four modernizations" transformation, actively layout the Chinese market at the same time, to pay attention to the improvement of the vehicle life cycle value-added service capabilities, especially for the new energy vehicle market, charging piles, battery life services are the focus of users' attention, to reserve the cost of value-added services to improve, to better achieve the sustainable development of enterprises and products.

National Business Daily

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