Volkswagen plans to reduce the cost of administrative staff for its brand name by a fifth person, management told employees on Wednesday, adding that this will be done through partial and early retirements rather than layoffs.
The goal is part of Volkswagen’s drive to cut costs for the VW brand by 10 billion euros ($10.8 billion) by 2026, after the company previously warned that its passenger cars would no longer be used due to high costs and low production.
Like other automakers, Volkswagen has been hit by inflation, stiff competition from Asia and high labor and energy costs in Germany, forcing the company to cut costs to avoid falling further behind its rivals, including Tesla.
“What is clear is that in the future we will have to work with fewer people in many areas of Volkswagen,” VW brand CEO Thomas Schaefer told employees, according to an internal memo seen by Reuters.
“This does not mean more work for a few people, but rather giving up old habits and saying no to repetition and ineffectiveness,” he said.
Other efforts include shortening the product cycle from 50 months to 3 years, reducing total production time and eliminating the planned new 800 million euro R&D center in Wolfsburg, the memo said.
($1 = 0.9283 euros)