100 years of Volkswagen layoffs for the winter
In 2020, Volkswagen set the goal of "Volkswagen will replace Tesla in 2024 and become the champion of electric vehicle sales and the world's largest electric vehicle manufacturer". At that time, Tesla CEO Elon Musk publicly said that he did not agree with this prediction. Volkswagen Group CEO Diess also put down cruel words - will surpass Tesla in 2025.
Now, before Diess's target time, Volkswagen has announced that it will lay off employees for the winter.
On November 27, Thomas Schaefer, CEO of the Volkswagen brand, told employees at a conference that Volkswagen brand cars are not competitive due to high costs and declining productivity. In an effort to cut costs, Volkswagen plans to lay off employees to boost the company's financial outlook. The Volkswagen Group is currently negotiating with the Works Council on the Volkswagen brand's staff reduction plan, which will be announced on December 6 through a partial retirement or early retirement agreement. Thomas Schafer said 2024 will be a difficult year for Volkswagen, as several markets are under heavy pressure and EV orders are not as expected. Historically, there has not been enough capital to operate without drastic cost cuts. Industry insiders believe that rising inflation and interest rates, as well as the reduction of subsidies for electric vehicles in Germany, have led to weak demand in the European electric vehicle market, which is the main reason for Volkswagen's difficulties. The planned layoffs are also interpreted as the first step in the Volkswagen Group's electrification transformation to improve efficiency. As of press time, Volkswagen has not officially responded to the above news.
What happened to Centennial Volkswagen?
The rapid development of the "New Four Modernizations" transformation of the automotive industry has made it particularly difficult for fuel giants to "turn around".
According to public information, Volkswagen Group, founded in 1938 and headquartered in Wolfsburg, Germany, is the largest automobile company in Europe and one of the earliest foreign car companies to enter the Chinese auto market, with Volkswagen, Audi, Skoda, Porsche and other well-known brands.
In the domestic market, Volkswagen has always been known for its good sales. In recent years, in the European market, traditional fuel vehicles have been threatened by brands such as Stellantis, Hyundai, and Kia. These brands have robbed Volkswagen of market share in Europe with cheaper products. At the same time, Volkswagen is also facing the challenge of strong Chinese brands in the field of new energy.
Among them, the Volkswagen brand is the revenue pillar of the Volkswagen Group, and it is also the brand with the highest cumulative sales volume of the group, but it is the "most laggard" brand in the Volkswagen Group in terms of profit.
According to the data, although the sales volume of the Volkswagen brand in the first three months of this year was much higher than that of other mainstream market brands of the Volkswagen Group, including Skoda and Seat, the operating profit margin was the lowest among the group's brands.
Although the Volkswagen Group is a relatively active brand in the electrification transformation among many multinational automakers, in terms of sales, Volkswagen's sales are not optimistic compared with the current main electric vehicle brands.
According to the data, Volkswagen's global cumulative sales in 2022 will be 4.56 million units, of which the delivery of electric vehicles will increase by 23.6% year-on-year to 330,000 units. For comparison, Tesla's global sales in 2022 will be 1,314,300 units, of which 439,000 units will be sold in China, while BYD's sales will be 1,863,500 units. Volkswagen is now trying to invest more to accelerate the pace of electrification and close the gap with a new generation of giants such as Tesla in terms of electric vehicles.
In June this year, Volkswagen announced its "ACCELERATE FORWARD丨Road to 6.5" global performance plan. The Volkswagen brand aims to increase its return on sales to 6.5 percent and increase earnings by around 10 billion euros by 2026.
There is an urgent need to boost sales in the Chinese market
With the rapid development of new energy vehicles, the competitive landscape of China's auto market has changed.
Especially since the beginning of this year, the market share of mainstream joint venture brands such as German and Japanese brands has declined, while independent brands have quickly occupied the market with the help of new energy advantages, and the market share reached about 60% in October.
For foreign brands such as Volkswagen, there is an urgent need to launch competitive electric vehicle products. The industry believes that the slow iteration speed of foreign brand electric vehicle products and the lack of intelligent elements are the main reasons why it is difficult to open the market. The Volkswagen Group's transition to electrification in China has not been smooth. Although its all-electric models account for more than 60% of global sales in Europe, the Volkswagen Group's models have been flat in China, where demand for electric vehicles is growing rapidly.
In the third quarter, the Volkswagen Group's deliveries in China fell by 5.8 percent. Volkswagen's stock price fell more than 2.6% at one point after the news broke. Previously, Ralf Brandstaetter, CEO of Volkswagen Group China, revealed in an interview that "Volkswagen Group will continue to invest in China, otherwise it will lose competition after three years." ”
At present, the Volkswagen Group is in a critical period of electrification transformation, and according to the plan, by 2030, Volkswagen Group's brands, including Volkswagen and Audi, will provide more than 30 pure electric models in China. It should be noted that with the great changes in the global auto market, the competition in today's new energy track is particularly fierce, and the Volkswagen Group, as one of the world's old car companies, is now not only facing a difficult period of electrification transformation, but also facing the external impact of Tesla and China's new energy vehicles, which also means that there is not much time left for the Volkswagen Group to "transform".
The cold wave is surging, and many car companies collectively "reduce costs and increase efficiency"
In fact, in addition to Volkswagen, since the beginning of this year, there has been a rare "layoff war" in the automotive industry, and many car companies have had to reduce the scale of their personnel under the fierce price war.
Internationally, traditional automakers such as Ford and General Motors have laid off about 11 percent of their workforce in Europe, while General Motors has laid off hundreds of full-time contract workers at its suburban engineering center in Detroit. Even the new automakers have not been spared, with the American car-making brand Lucid laying off about 18% of its workforce, and the Geely-derived Polestar car laying off 10% of its workforce worldwide.
At the domestic level, in August this year, GAC Toyota announced that it would lay off more than 1,000 employees; at the beginning of this month, Chery Jaguar Land Rover's official Weibo announced that it had optimized the positions of some personnel, and the adjustment ratio was less than 3% of the total number of employees; in addition, the well-known new power car company Gaohe Automobile carried out large-scale layoffs, the proportion was as high as 20%, and some departments were even laid off by 50%. Soon after, Li Bin, CEO of NIO, issued an all-staff letter, in which in addition to mentioning the 10% reduction of personnel, it was more about adjusting the internal organization and resource investment.
Volume technology, volume price, volume configuration, volume equity... The automobile industry has undergone major changes, and the polarization of car companies has become more and more serious. Under the transformation of new energy vehicles, it has brought opportunities to various car companies, but also brought many challenges, and the global auto market may need to experience a cold winter before it warms up.