Volkswagen, one of the longest standing automotive brands in the world, is facing a reckoning.
Reuters has reportedly accessed an internal post where the Germany-based company's leaders didn’t mince words about its prospects: they say VW brand chief Thomas Schaefer told staff the company’s high costs and low productivity have led to a point where it is “no longer competitive.”
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Shaefer cited, specifically, “pre-existing structures, processes and high costs,” and Reuters says VW is talking with its works council in Europe to work out some ways to improve efficiency as it transitions to EVs.
As it previously reported in June, the company is eyeing some big cuts – around $10 billion euros – which they say will come, in part, from staff reductions. VW now says it hopes to take advantage of demographic shifts and rely on early or partial retirements for some of these cuts, vowing not to force layoffs until 2029.
While VW EVs are selling effectively, the problem is one of profitability. The June initiative – dubbed “Accelerate Forward; Road to 6.5” – intends to target synergies across brands in hopes of doubling the company’s profits to 6.5%.
Personnel cuts will play are a big part, but Reuters says that the lion’s share of the $10 billion in cuts will actually come from initiatives outside of the staff reductions. For instance, human resources board member Gunnar Kilian said this week that the automaker needs to “finally be brave and honest enough to throw things overboard that are being duplicated within the company or are simply ballast we don't need for good results.”