Volkswagen plans massive cuts to drive 4 billion euro savings
Volkswagen is implementing a savings plan that will impact both managers and employees. Reductions in executive salaries, job cuts, and the suspension of raises are expected to bring the company savings of 4 billion euros annually, reports "Deutsche Welle".
Volkswagen plans to reduce executive salaries by over 300 million euros by 2030. Gunnar Kilian, VW's chief of human resources, emphasized that cuts in management will be "disproportionately high compared to the contributions of management and employees." The decision to limit executive salaries was driven by pressure from the IG Metall union and the works council.
According to the report, Kilian did not disclose detailed information about the number of managers affected by the changes or the exact amount of savings within management.
One key element of Volkswagen's savings plan is workforce reduction. By 2030, the company plans to cut over 35,000 jobs in its German plants. Currently, Volkswagen's six main production plants employ approximately 100,000 workers.
Additionally, as part of an agreement made before Christmas, Volkswagen employees agreed to forgo pay raises in 2025 and 2026.
Savings plan valued at 4 billion euros annually
Volkswagen estimates that the savings plan will provide the company with net savings of around 4 billion euros annually. Of this amount, approximately 1.5 billion euros will come from labour cost reductions. Gunnar Kilian emphasized that lowering expenses is crucial for ensuring the group's future competitiveness.
Despite the challenging changes, Kilian calls for an approach to savings with the "right spirit," viewing them as an opportunity for the company's growth. According to him, Volkswagen has already set the right course for developing products and technology.
He highlighted that the vehicles are of exceptional quality and expressed optimism about future success, provided that costs can be sustainably reduced.
Note: The Canadian Dollar equivalent for 4 billion euros is approximately 5.7 billion CAD, and 300 million euros is roughly 430 million CAD, based on recent exchange rates. The time in Eastern Time (ET) when this was reported is approximately five hours behind Central European Time (CET).
