Blume told Volkswagen employees the situation is critical
Volkswagen Group CEO Oliver Blume said in an internal memo to employees that the situation at the company is more than critical. The automaker is preparing for a major restructuring to cut costs, Motor1 reports.
Costs higher than competitors
According to Blume, Volkswagen's overhead costs are more than 30% higher than those of comparable competitors. The group's operating margin currently stands at less than 4%. The VW chief described this result as acceptable given market conditions, but insufficient to sustainably finance the company's future development.
Blume linked the difficult situation to intense competition in the automotive market, including the global growth of Chinese brands. Volkswagen also plans to simplify its model range and cut costs.
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Layoffs and plants
The widely circulated figure of approximately 50,000 additional job cuts worldwide is not a final target, Blume explained. According to him, this is a theoretical calculation of the number of positions that would have to be eliminated to close the cost gap with competitors without changing labor costs.
No decision has yet been made to close four German plants in Zwickau, Emden, Hanover and Neckarsulm. At the same time, in the 2030s, their future may depend on the level of utilization of the production sites.
In addition to possible staff cuts and plant closures, Volkswagen plans to reduce the number of current models by up to 50% and cut the number of available options by 75%.
