FRANKFURT, Germany — FRANKFURT, Germany (AP) — Volkswagen is thinkingabout closing some factories in its home nation for the veryfirst time in the German automaker’s 87-year history, stating it otherwise won’t fulfill the cost-cutting objectives it requires to stay competitive.
CEO Oliver Blume likewise informed workers Wednesday that the business needto end a three-decade-old task defense promise that would haveactually forbidden layoffs through 2029.
The declarations have stirred outrage amongst employee agents and issue amongst German politicalleaders.
Here are some things to understand about the problems at one of the world’s best-known car brandnames:
Management states the business’s core brandname that brings the business’s name requires to attain 10 billion euros in expense costsavings by2026 It justrecently endedupbeing clear the Volkswagen Passenger Car department was not on track to do that after relying on retirements and voluntary buyouts to lower the laborforce in Germany.
With Europe’s automobile market smallersized than before the coronavirus pandemic, Volkswagen states it now has more factory capability than it requires — and bring underused assembly lines is pricey.
Chief Financial Officer Arno Antlitz discussed it like this to 25,000 employees who collected at the business’s Wolfsburg home base: Europeans are purchasing around 2 million vehicles per year less than they did before the pandemic in 2019, when sales reached 15.7 million.
Since Volkswagen has approximately a quarter of the European market, that implies “we are brief of 500,000 automobiles, the comparable of around 2 plants,” Antlitz informed the employees.
“And that has absolutelynothing to do with our items or bad sales efficiency. The market just is no longer there,” he stated.
The Volkswagen Group, whose 10 brandnames consistof SEAT, Skoda, CUPRA and business lorries, turned an operating revenue of 10.1 billion euros ($11.2 billion) in the veryfirst half of this year, down 11% from last year’s first-half figure.
Higher expenses surpassed a modest 1.6% boost in sales, which reached 158.8 billion euros however were held down by slow need. Blume called it “a strong efficiency” in a “demanding environment.” Volkswagen’s high-end brandnames, which consistof Porsche, Audi and Lamborghini, are selling muchbetter than VW designs.
The conversation about decreasing expenses focuses on the core brandname and its employees in Germany. Volkswagen’s guest vehicle department taped a 68% incomes drop in the 2nd quarter, and its earnings margin was a bare 0.9%, down from 4% in the veryfirst quarter.
One factor is the department took the bulk of the 1 billion euros that went to task buyouts and other restructuring expenses. But growing expenses, consistingof for greater earnings, and s