Volkswagen CEO Oliver Blume says prices in Germany have to be “massively lowered.”
VW Group income 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 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, income 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 ends in China. The 56-year-old government who can 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 typical for our European places. There’s additionally a necessity for motion in our improvement and gross sales prices and in different price areas when in comparison with our opponents. The purpose for price and capability adjustment has been set.”
Using “many years” is fascinating because it means VW has been having issues because the Piech period, which some imagine represented the golden years of the Group. The nasty Dieselgate scandal definitely put strain on the corporate. In early 2020, VW stated the messy debacle price the corporate round €31.3 billion. At present trade charges, that works out to roughly $34 billion. Software program gremlins of the Golf 8 and ID.3 together with associated merchandise additionally harm the Group’s picture in recent times.
Oliver Blume’s cost-cutting plan is echoed by Gunnar Kilian, VW’s man accountable for human assets. The HR boss advised Bild the workforce have to be “prepared to just accept cuts” as the corporate should “roll up its sleeves and sort out 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 vehicles. Loyalty bonuses value 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 staff 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 can hopefully flip issues round. Whether or not factories will likely be closed stays to be seen, however with rising competitors from China, the Group certainly has its work minimize out for it.
