VW To Lay Off Up To 7,000 Employees Via Early Retirement

When VW Group announced yesterday its overly ambitious plan to launch 70 new electric vehicles by 2028 amounting to 22 million units, it failed to reveal that there’s a less glamorous part to that strategy.

That involves layoffs, up to 7,000 of them for the Volkswagen passenger car brand alone, as announced today by the company. While VW has ruled out compulsory layoffs until 2025, early retirements and the automation of routine tasks will allow it to reduce its workforce between 5,000 and 7,000 positions by 2023.

“The potential number of employees born during the next three defined periods eligible for partial retirement totals about 11,000. Restructuring along the demographic curve is therefore possible,” Volkswagen said in a statement.

The company added it will not be recruiting replacements for employees who agree to early retirement offers. At the same time, the carmaker will create some 2,000 new jobs in Technical Development, more specifically in electronics architecture and software.

Besides plans to shrink its workforce, the VW passenger car brand also targets to raise productivity and achieve €5.9 billion ($6.6 billion) worth of annual savings from 2023 in a bid to increase the operating margin to 6 percent. To do that, the carmaker will reduce the number of model variants and material costs. Furthermore, the company targets a 5 percent yearly increase in productivity at its plants, as well as a stronger focus on process digitalization.

“We will significantly step up the pace of our transformation so as to make Volkswagen fit for the electric and digital era. Volkswagen is to become more efficient and agile and a more attractive and modern employer, especially in administration,” said Ralf Brandstätter, Chief Operating Officer of the Volkswagen brand.

“Initial constructive talks with the Works Council on the planned implementation of the digitalization roadmap in the administrative areas of the company have already taken place,” the executive added.