- Volkswagen CEO Oliver Blume says prices in Germany have to be “massively lowered.”
- VW Group earnings fell 63.7% in Q3 2024 when gross sales decreased by 8.3%.
- Pay cuts are deliberate to keep away from closing factories.
To say Volkswagen goes by means of a tough patch can be an understatement. The Group’s newest numbers look horrible: Earnings after tax collapsed by 63.7% within the third quarter when gross sales dropped by 8.3%. By means of this yr’s first 9 months, earnings are down 30.7% and gross sales are 4.4% decrease. CEO Oliver Blume believes ghosts of the previous are haunting the German automotive conglomerate, culminating with the continuing hurdles.
Talking with the Sunday version of the German newspaper Bild, Blume blamed “decades-long structural issues at VW” for the gross sales droop in Europe and the poor leads to China. The 56-year-old govt who can also be Porsche’s CEO believes the world’s second-largest automaker must drastically minimize prices to get again into form.
“Our labor prices right here [in Germany], for instance, are sometimes greater than twice as excessive as the common for our European areas. There’s additionally a necessity for motion in our growth and gross sales prices and in different value areas when in comparison with our opponents. The objective for value and capability adjustment has been set.”
The usage of “many years” is attention-grabbing because it means VW has been having issues for the reason that Piech period, which some imagine represented the golden years of the Group. The nasty Dieselgate scandal definitely put stress on the corporate. In early 2020, VW stated the messy debacle value the corporate round €31.3 billion. At present alternate charges, that works out to roughly $34 billion. Software program gremlins of the Golf 8 and ID.3 together with associated merchandise additionally damage the Group’s picture lately.
Oliver Blume’s cost-cutting plan is echoed by Gunnar Kilian, VW’s man in command of human assets. The HR boss instructed Bild the workforce have to be “prepared to just accept cuts” as the corporate should “roll up its sleeves and deal with the restructuring shortly.” Consequently, the union’s demand for a 7% pay rise has been rejected. Not solely that however the plan is to scale back pay by 10%. A brand new spherical of collective bargaining is ready for November 21.
Bild has realized VW plans to scale back oblique personnel prices by slashing vacation bonuses and even reductions on firm automobiles. Loyalty bonuses price as much as three months’ wage are in peril, whereas the variety of trainees is predicted to lower. One other goal is to maximise the “demographic curve” by not submitting positions when elder employees retire. Early retirement packages are additionally deliberate. Elsewhere, a spokesperson stated: “Materials and product prices are to be optimized, mounted and manufacturing prices are to be lowered.”
Bild mentions VW has put aside about €900 million (almost $1 billion) to implement measures to scale back prices that may hopefully flip issues round. Whether or not factories might be closed stays to be seen, however with rising competitors from China, the Group absolutely has its work minimize out for it.
