Volkswagen Group, the world's second-largest automaker, is facing an unprecedented crisis under the heavy blow of new energy vehicles.
Recently, the news that the Volkswagen Group will lay off employees on a large scale in Europe has attracted widespread attention. According to reports, the number of layoffs could be as high as 30,000, a staggering number.
This figure not only accounts for nearly 10% of Volkswagen's total number of employees in Germany, but also breaks the agreement that the company has signed with the union for many years to guarantee employment until 2029.
Volkswagen's labor council said rumors of 30,000 layoffs were baseless. A Volkswagen spokesman said Volkswagen must reduce costs at its Germany plant in order to have enough cash to invest in the future.
Volkswagen Group CEO Oliver Blume said that laying off 30,000 Germany employees is feasible in the long term.
According to Volkswagen's 2023 annual report, the number of employees in the company reached 298687 in Germany, which is a significant portion of its global workforce.
If the rumored 30,000 layoffs are true, this means that about one in ten Germany employees will face unemployment, which will undoubtedly have a huge impact on the German job market.
Volkswagen's R&D department will reportedly be greatly affected, with layoffs expected to be between 4,000 and 6,000 people.
Currently, Volkswagen's R&D team has around 13,000 employees, which means that the R&D department could be as high as 46% of its workforce is cut off.
In recent years, the Volkswagen Group's net profit has fallen by almost 15% year-on-year to 15.4 billion euros, despite the continuous increase in global sales, reaching a staggering 230 billion euros in 2023.
Although the transformation of the electric vehicle market is the general trend, Volkswagen has a heavy financial burden due to high R&D expenditures and unprofitable profitability in the short term.
Faced with financial pressures, the Volkswagen Group has had to take a series of measures to reduce costs and increase competitiveness. Layoffs have become one of the most direct and effective ways.
China is the largest market for the Volkswagen Group, but Volkswagen's operating profit in China in the first half of this year was only 801 million euros (about 6.3 billion yuan), down 30% year-on-year.
It is worth mentioning that Volkswagen lost 193 million euros (about 1.52 billion yuan) in China in the second quarter, compared with a profit of 348 million euros (about 2.74 billion yuan) in the same period last year.
In the first half of this year, the Volkswagen Group's sales in China were 1.345 million units, down 7.4 percent year-on-year, accounting for only 30.9 percent of Volkswagen's total sales, compared with more than 40 percent in previous years.
In China, Volkswagen's two joint ventures, SAIC-Volkswagen and FAW-Volkswagen, have also focused on reducing costs in recent years.
At present, Volkswagen's joint ventures in China are still facing severe market competition, and in order to maintain sales, they must promote sales, which will further hurt costs, and the recovery of profit growth will be far away.
Due to the endless emergence of new products in the market and the intensity of competition, the price reduction has not helped Volkswagen regain a foothold in the Chinese market, but has further eroded the profit level in China.
A few more words
The news of "layoffs" continues, reflecting the difficulties of the current survival of car companies. The reason behind this wave of layoffs is not difficult to understand, it is nothing more than "reducing costs and increasing efficiency" driven by declining performance.
In the context of the slowdown in the growth of the electric vehicle market and the intensification of competition, reducing costs and increasing efficiency is the only choice for many car companies, and it is expected that more car companies will report layoffs in the future.