In a bold cost-cutting blitz, Volkswagen has announced a €10 billion savings plan to secure its competitive edge by 2026. This sweeping strategy could see 10% wage cuts across administrative positions, saving the automaker an estimated €800 million annually, while a 20% slash in administrative costs will be achieved through voluntary buyouts, early retirements, and an intense hiring freeze, avoiding outright layoffs but significantly reducing the workforce.
Dubbed “Accelerate Forward / Road to 6.5,” VW’s plan aims for a 6.5% return on sales by 2026. CEO Thomas Schäfer has called this cost-cutting drive “the most comprehensive program the brand has ever launched,” warning that the company must overhaul old structures to counter fierce EV competition and rising operational costs.
A Tough Road Ahead: Job Protections in Question
VW’s radical program has also rattled the foundation of long-standing German job protections. Reports indicate that VW may terminate three-decade-old agreements safeguarding employment until 2029 at its German plants, opening the door to layoffs by 2025. Union leaders have pledged to resist these changes, with Daniela Cavallo of the IG Metall union promising “fierce resistance” to any workforce cuts.
Streamlining Production to Boost Efficiency
VW’s approach doesn’t stop at wages and job cuts. Plans include shortening product cycles from 50 to 36 months, reducing production times, and implementing a 50% reduction in physical test vehicles by leveraging digital testing and advanced technology. VW also aims to enhance procurement and after-sales services, which could save hundreds of millions annually, thereby tightening its operations to maintain margins as competition mounts.
This aggressive plan is a high-stakes gamble that VW hopes will transform it into a leaner, more agile automaker capable of weathering the challenges of a rapidly electrifying market.
