As electric and self-driving cars gain ground, VW to cut at least 7,000 jobs

Volkswagen AG’s main car brand plans to deepen cost cuts and axe more jobs as profits slip in the industry’s shift to electric and self-driving cars.

The German carmaker said on Wednesday it will eliminate at least 7,000 positions — with measures including early retirement and not filling vacant positions — for an annual profit gain of €5.9 billion ($6.7 billion), starting 2023. “We will significantly step up the pace of our transformation so as to make Volkswagen fit for the electric and digital era,” said Ralf Brandstaetter, Chief Operating Officer, VW brand.

The VW car brand, which accounts for about half of the group’s global deliveries, employs about 1,85,000 workers out of a total workforce of 6,50,000. VW has been pushing to rein in bloated expenses to lift profitability that’s trailing rivals.

Return on sales for VW’s namesake brand last year fell to 3.8 per cent from 4.2 per cent because of higher spending on future electric models and production bottlenecks triggered by stricter emission rules in Europe. “Labour costs are a big concern that risk derailing a much needed streamlining of operations,” VW Chief Executive Officer Herbert Diess told investors on Tuesday. Diess, who also heads up the VW brand, has been axing slow-selling models and car variants to reduce complexity. Further measures will include lowering material costs and lifting productivity at its factories by 5 per cent to achieve an operating profit margin of 6 per cent in 2022.

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