Volkswagen Targets €4B in Cost with Wage and Bonus Cuts Amid Economic Pressure

Volkswagen is exploring a series of cost-cutting measures for its core brand. This cost reduction by Volkswagen includes a 10% wage cut and a two-year wage freeze, as it seeks to save 4 billion euros. This news of Volkswagen plan was reported by Handelsblatt newspaper on Sunday, citing company insiders.

(Image Credit: volkswagen-newsroom)

Volkswagen is under increasing pressure do cost reduction and reduce expenses amid a challenging economic climate. Meanwhile, Volkswagen workers have criticized the carmaker management for not presenting a clear future strategy. This was despite them making promises of a new plan in the works.

Volkswagen’s wage cuts a part of cost cutting strategy

Volkswagen’s leadership has discussed several potential cost-saving moves as per Handelsblatt. These include cut in bonuses for top-tier employees, reducing additional payments for employee anniversaries, and exploring possible closures of some German production sites.

Volkswagen’s saving measures

A Volkswagen spokesperson declined to comment to Handelsblatt on the ongoing negotiations with the company’s works council and IG Metall, Germany’s powerful metalworkers’ union.

Since early October, Volkswagen’s management has been meeting weekly with worker representatives from its German plants, analyzing where cost cuts can be made and which models will be produced at each location.

Negotiations over wage increases are handled separately, according to a union spokesperson, with the next formal round set for Oct. 30.

Volkswagen fined

A British regulator has fined Volkswagen’s UK financial services unit 5.4 million pounds ($7 million) for unfairly treating financially-stretched customers between 2017 and 2023.

Volkswagen Financial Services (UK) Limited, which has agreed to pay over 21.5 million pounds in redress to around 110,000 customers who may have suffered, also took cars away from vulnerable customers without considering other options, the Financial Conduct Authority (FCA) said on Monday.

The failings occurred between January 2017 and July 2023. It was compounded by poorly formatted and automated communications, as per the regulator.

Volkswagen new EVs

Meanwhile, Volkswagen’s Scout Motors unit  unveiled its concept electric SUV and truck. Volkswagen said it will offer extended-range versions that include a small gasoline engine.

VW is building a $2B factory in South Carolina and expects to begin production of the new vehicles in 2027. The full EV versions will offer up to 350 miles on a charge. The extended-range version will have 500 miles.

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