Volkswagen bosses have reportedly met with workers and implored them to get on board with the company’s cost-cutting drive… before it’s too late.
Reuters reports Volkswagen finance chief Arno Antlitz attended a gathering of 25,000 workers at the company’s Wolfsburg headquarters, and said they needed to work with management in cutting spending.
His remarks were reportedly met with heckling from the audience.
“We have been spending more money at the brand than we earn for some time now. That can’t go well in the long term. If we carry on like this, we won’t succeed in the transformation,” he said, in remarks reported by Motor1.
“In Europe, two million fewer vehicles are currently sold than before COVID.
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Volkswagen ID.3 in the Transparent Factory
“Before COVID, around 16 million vehicles were bought in Europe. During and after COVID, this figure fell to around 12 million vehicles because the entire industry did not have enough semiconductors.
“The market in Europe has recovered since then, but will not return to its former level. We expect around 14 million vehicles to be sold per year in the future, if at all. So there is a shortfall of around two million units.
“We [the Volkswagen Group] are the largest manufacturer with around a quarter of the market share in Europe. We are short of around 500,000 cars, the equivalent of around two plants. And that has nothing to do with our products or poor sales performance. The market is simply no longer there.
“It is our joint responsibility to improve the cost efficiency of the German sites in particular. We need to increase productivity and reduce costs. We still have a year, maybe two years, to turn things around. But we have to make use of this time.
“Simultaneously, we need to reduce the complexity of our processes and leverage even more Group synergies.”
And while Volkswagen’s historic strength in China has long helped it, Volkswagen Group CEO Oliver Blume warned workers the company could no longer count on the market.
“There are no more cheques coming from China,” he was reported as saying.
A report earlier this week said Volkswagen was looking to close two factories in Germany, which would be the first time it had ever shuttered a plant in its homeland.
One of these is reportedly the Transparent Factory in Dresden that produces the ID.3 electric hatch.
That puts the carmaker on a collision course with its powerful unions, who will fight to protect jobs and plants. Also complicating matters is the state of Lower Saxony holding one fifth of the company’s shares and naturally wanting to protect jobs.
Works council chief Daniela Cavallo said Volkswagen management had “massively damaged trust”, and according to Reuters the IG Metall union didn’t rule out strikes.
Ms Cavallo reportedly questioned why Mr Blume was prioritising a €5 billion (~A$8.25bn) software partnership with American startup Rivian over protecting German jobs.
Volkswagen is facing headwinds as it invests heavily in electric vehicles (EVs)… which are facing tough competition from rival brands, including the Chinese.
Late in 2022, BYD overtook Volkswagen as the best-selling brand in the Chinese market. The German giant’s market share has declined in recent years, and this has impacted its profits.
Back in Germany, Volkswagen has been impacted by the government’s removal of EV subsidies last year. The company ended up stepping in and covering subsidies for buyers.
Volkswagen launched a cost-cutting program last year that has reportedly fallen short by several billion euros.
Ms Cavallo said the cuts the company should be making should be to its bureaucracy.
“We need to reduce our complexity; we need to tackle our obsession with rules; we need to stop our documentation madness,” she said in remarks reported by the Financial Times, adding that “all of this is a task for management”.
