Volkswagen to cut 30,000 jobs to save $3.9 bn
18 Nov 2016
Volkswagen AG today announced that it will cut around 30,000 jobs globally in order to save €3.7 billion ($3.9 billion) in expenses, as the German carmaker seeks to recover from the emissions scandal, which has so far cost it $20 billion.
The car giant, which employs 624,000 people in 34 countries, said that the 30,000 job cuts include 23,000 in Germany, but will create 9,000 new jobs as it shifts to electric and self-drive technology.
This exercise should bring in annual savings of $3.9 billion (€3.7 billion) by 2020.
The company said that the plan is the most radical in its history. Volkswagen executive in charge of VW brand cars, Herbert Diess, said that the company needed to brace itself for drastic changes as the automobile industry shifted to electric vehicles.
Volkswagen CEO, Matthias Mueller, said it was ''the biggest modernisation programme in the history of the group's core brand.''
''The VW brand needs a real shake-up and that is exactly what the future pact has turned out to be,'' he added.
Volkswagen, Europe's largest automaker, has been grappling with the emission cheating scandal that has hit sales and so far cost the company around $20 billion.
The company fitted its cars with so-called default devices software that changed engine performance during emissions testing.
In June, the Wolfsburg-based company agreed to pay up to $14.7 billion to settle claims, in what would be one of the largest consumer class-action settlements ever in the United States. (See: Emissions scam: VW to pay up to $14.7 m to settle claims)
Volkswagen may yet face further fines as customers in other countries demand compensation.
The VW group has 12 brands from seven European countries: Volkswagen passenger cars, Audi, Seat, Skoda, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania and MAN.
Apart from the emission scandal, the company has struggled with profit margins well below those of its rivals, weighed down by onerous labour contracts and a complex corporate structure.
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