Why is Volkswagen laying off employees?
The automaker is cutting its workforce due to weak demand, high EV costs, and increased competition from China. Volkswagen (VW) has secured agreements for approximately 20,000 employees to voluntarily leave the company by 2030, a major milestone in its sweeping plan to restructure German operations. Volkswagen could shut down as many as three factories in Germany and lay off tens of thousands of workers as it seeks to regain its edge in Europe amid slumping sales and increased competition from China, the company’s top employee representative said Monday.The board wants to close at least three factories in Germany,” the works council chief, Daniela Cavallo, told employees at VW’s headquarters in Wolfsburg on Monday. Its remaining manufacturing sites will reduce capacity, she said, citing information provided by management.Historic moment for Volkswagen: Automaker plans to close ‘at least’ 3 German plants and cut thousands of jobs. Volkswagen employees gather to hear from the automaker’s works council at the company’s headquarters in Wolfsburg, Germany on October 28, 2024.Overcapacity and rising operational costs Volkswagen’s German operations face significant challenges, particularly due to overcapacity. According to VW, two of its factories are redundant, forcing the company to streamline production and improve efficiency.
What is happening to VW?
Workers at the car giant have been taking industrial action following VW’s revelations about the possibility of closing German plants and axing thousands of jobs. Volkswagen is struggling with falling sales in Europe, high labour costs and excess capacity. Future Plans for Volkswagen: Innovation, Electrification, and Expansion. Looking beyond 2025, Volkswagen is positioning itself to dominate the global volume market with a heavy emphasis on technology leadership by 2030.Is Volkswagen a bigger manufacturer than Toyota? In 2021, Toyota established itself as the world’s number 1 seller, with a total of 10. Volkswagen comes in at second place, not far behind with 8,82 million vehicles sold.As regards China, VW has recorded a sharp decline in sales due to strong domestic competition. In 2023, profits from its Chinese joint ventures were 20% lower than in 2022, and the company expects them to fall by a further 40% in 2024, down to an estimated €1.
Are VW in financial trouble?
Volkswagen Group, one of the world’s largest car manufacturers, is facing a serious financial crisis. According to information from the German newspaper Bild, the company lacks about 11 billion euros, which are needed to ensure its smooth operation and vital investments next year. As a result, the Volkswagen Group now expects an operating return on sales in the range of 2 to 3% in the 2025 financial year (previously: 4 to 5%). The Volkswagen Group now expects net cash flow in the Automotive division to be around €0 billion (previously: €1 to 3 billion).Volkswagen Group has an overall rating of 4. This rating has decreased by 1% over the last 12 months. Volkswagen Group to a friend and 57% have a positive outlook for the business.