According to Reuters, Volkswagen is speeding up the pace of dismissing 23,000 employees and will focus on the development of electric vehicles and autonomous driving technology. The company plans to create 9,000 new jobs in super batteries and mobile services.
Volkswagen Golf Electric Edition (e-Gulf)
Volkswagen is not alone in the drastic downsizing. Both General Motors and Ford Motors have announced significant layoffs. They are also focusing on increasing investment in electric vehicles and autonomous driving technology.
Last month, Ford Motor Company suddenly fired its CEO, Mark Fields, and Jim Hackett, head of its autonomous vehicle division, replaced it.
Accelerating the retirement of traditional core staff
On June 23, Karlheinz Blessing, Volkswagen’s human resources minister, said that the company is speeding up layoffs for its core divisions and thus helping to reduce production costs.
The world’s largest automaker broke the emissions cheating scandal last year. Since then, it has been transforming its divisions with sales targets and investing the savings in the development of electric vehicles and autonomous driving technology.
After difficult negotiations, Volkswagen signed a transition agreement with the union in November last year, and more than 7,500 employees have accepted the early retirement program.
Improve profitability and take a long way to go
Relying on the reduction of inherent costs and micro-management R&D, procurement and production operations, Volkswagen plans to increase the production capacity of German manufacturing plants by 7.5% in the next two years and by 5% between 2019 and 2020.
Volkswagen is also seeking to increase its operating profit margin from 1.8% in 2016 to 2.5% to 3.5%, but this target is still below the profitability standards of European competitors such as Peugeot Citroen and Renault.
“There is still a long way to go to improve profitability,†Blessing said. “The 2018, 2019 and 2020 will be challenging for the public.â€
The agreement between the Volkswagen management and the labor union will lay off 23,000 people as a condition of exchange. The super battery and mobile service are expected to create 9,000 new jobs.
The transformation of automobile manufacturers has become a major trend
The US auto market sales peaked last year, and the volatility of auto sales will not affect the layoff plans of several major automakers.
In the eyes of global executives, the threat posed by emerging electric vehicles and autonomous driving technology is already a matter of life and death for the traditional automotive industry.
The premise that will not be eliminated by the market in the next five to ten years will no longer be to create a more efficient internal combustion engine, or to plan the most eye-catching marketing activities, but to firmly grasp the development frontier of the next generation of automotive technology.
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