German Volkswagen said that in order to compete with other car manufacturers, it may have to lay off an additional 50,000 employees.
According to the US Wall Street Journal, in an internal memo released on July 13 local time, Volkswagen CEO Oliver Brunner stated that he is evaluating possible layoffs among its brands and regional subsidiaries. Brunner also said that he cannot guarantee the future of Volkswagen's four factories in Germany.
Europe is facing huge economic and political pressure, Bloomberg said. Germany, as a country that exports goods heavily, has been particularly affected. And in the automotive industry, the challenges are like magnifying glasses being placed upon them.
Brum said that in terms of administration, infrastructure, and other functions that support its core operations, the company's costs are 20% higher than those of its peers. He said that theoretically, to narrow this gap without cutting salaries, there would be a need for layoffs of 50,000 people.
According to reports, the latest cost-cut measures were introduced after Volkswagen decided to cut 50,000 jobs. As of the end of last year, Volkswagen still employed approximately 660,000 employees, with roughly one employee for every 14 sold vehicles.
Reuters reported that this is the first confirmation that the automobile manufacturer is seeking to cut up to 100,000 jobs.
In the Chinese market, the sales of Volkswagen have been declining continuously. Media reports from foreign countries.
Last month, people familiar with the matter said that Volkswagen in Germany is considering closing four factories and reducing the number of employees by as many as 100,000 people (about one-sixth of the company’s global workforce). This could be the largest restructuring in the automotive industry ever.
Reports suggest that this move comes at a time when the public is facing difficulties. The company stated that due to increasing pressure from Chinese competitors, high American tariffs, and declining demand in Europe, their previous business model is unsustainable.
But investors are skeptical about whether the cost-cut plans will be successful.
Previously, Volkswagen shareholder Ingo Specht told Reuters: 'High costs are just a surface issue, not the root cause. They haven’t addressed the root problem, which is weak sales. Volkswagen must introduce products that meet market demand and are attractive.'
