Dieselgate cost-cutting continues; cuts will help fund electric vehicle push
Jimi Beckwith
18 November 2016

Volkswagen is reported to be cutting 30,000 jobs in the next three years after striking a deal with its labour unions.

The cuts are the result of the growing cost of the Dieselgate emissions scandal, but they're also aimed at increasing VW’s focus on autonomous and electric cars, according to a report from Reuters.

New Volkswagen strategy to cull low-profit models and invest heavily in e-mobility

Some 23,000 of these job losses – which will come before 2020 - will be in VW’s native Germany. It hasn’t been made clear if these are widespread or concentrated within VW’s HQ at Wolfsburg. VW boss Matthias Mueller described the job cuts as "the biggest modernisation programme in the history of the group's core brand."

Read more: VW emissions scandal - one year on

The spread of the other 7000 redundancies has also not yet been confirmed, but they are expected to be in North and South America, given VW’s now diminished presence in North America and the recession currently happening in South America. The BBC reports that Volkswagen has said none of the redundancies will be compulsory.

The cuts make up around 5% of VW’s 610,000-strong employee base (nearer one fifth in Germany, where 120,000 work for VW), but Reuters also reports that 9000 new jobs are to be created around the brand’s renewed electric vehicle push.

The aim of the move is to raise VW's operating profit from 2% to 4%.

The job losses are expected to trim €3.7 billion (around £3.1bn) from VW’s yearly outgoings. Earlier this year, VW put aside £13.6bn to cover the cost of the emissions scandal. Some £9.62bn of that will go on compensation for US owners alone.

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Volkswagen has been negotiating the deal with its unions since June and will announce the cuts today at a press conference. No job losses elsewhere in the Volkswagen Group have been announced.

Autocar is waiting for official response from Volkswagen.

Read more: British government could prosecute VW Group

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18

18 November 2016
It seems that failures in the way the company is run and the management decisions regarding this emissions scandal are now coming home to effect the factory workforce. I wonder how many top management and executives were also fired, let go, removed from their posts for their part in this matter. DieselGate was a management created problem that become a company tarnishing scandal.
A shame in so many ways.

18 November 2016
VAG still will need almost 2x as many workers to produce roughly the same number of cars as Toyota. As mx5xm notes this is a management issue, probably going back a long way. The heavy control of their unions doesn't help them respond to changing markets and the technologies which they have thousands of linked jobs (e.g. diesel) look increasingly like they're going to become less and less important. What with pension obligations and German labour laws it must be very hard for them to react.

China which is their most important market will quickly move towards electrification as its a government-supported key technology. The local Chinese firms are obviously looking to get a lead in this tech and leapfrog firms like VAG. At the same time they don't have the legacy worker issues VAG has.

18 November 2016
Sounds similar[union wise] to all the UK problems way back in the 60's and 70's which is why we have no mainstream UK makers anymore,BL and Rootes were rubbish anyway, my family owned many of these cars and German cars were a rare sight on UK roads,Japanese cars were non existent at the time .

18 November 2016
they didnt try to blame Brexit, everybody else seems to.

18 November 2016
Well surprise, surprise! VW management's obsession with world dominance and their consequent cutting of corners ends up costing many of the factory workforce their livelihoods. Who'd have guessed?

18 November 2016
It may be almost unthinkable a first sight, but will VW survive this crisis?
They are already facing payments totalling billions; so no wonder they are just gritting their teeth and refusing compensation in Europe. If European Goverments insist does VW have the required reserves?
You can be sure that the German Govt will fight any compensation deal to the end for just this reason.

18 November 2016
It may be almost unthinkable a first sight, but will VW survive this crisis?
They are already facing payments totalling billions; so no wonder they are just gritting their teeth and refusing compensation in Europe. If European Goverments insist does VW have the required reserves?
You can be sure that the German Govt will fight any compensation deal to the end for just this reason.

18 November 2016
I'm sure many of these unfortunate VW employees have no involvement in their bosses corruption. Yet they will pay a hefty price. Hope Volkswagen offers them a decent compensation package like the one for their US customers, not the contempt in which they hold their European buyers.

18 November 2016
If Europe had a determined and diligent agency prepared to prosecute for any laws that were broken then there may be a case for compensation to owners. As it is, I can't see it happening.

Added to which, the whole thrust of VW's marketing campaign in the USA was 'Clean Diesel', appealing to the kind of environmentally-minded people who might otherwise buy a Prius. Many of them will feel defrauded about the primary reason they selected a TDI.

19 November 2016
What you refer to as "lots of moaning for compensation" is not just about that. It is primarily a matter of breaking rules and using legal loopholes. It is about corporate greed and corruption. It is about deceiving buyers by misrepresenting your products and lying and using legal loopholes. It concerns corporate sleaze and using underhand methods to steal the march over competition. It is a rather complex matter and a very serious fraud. Otherwise Volkswagen won't give away $15 billion in the USA. Volkswagen is over compensating US buyers while treating European buyers with monumental indifference and contempt. I agree though that European and German authorities are also to blame for their timid and spineless stand that is if they have one.

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