Published: Thu, March 14, 2019
Money | By Ralph Mccoy

Volkswagen Slashing Up to 7,000 Jobs to Boost R&D by $9 Billion

Volkswagen Slashing Up to 7,000 Jobs to Boost R&D by $9 Billion

On Tuesday, the group's CEO Herbert Diess revised the numbers and announced Volkswagen plans to launch a total of 70 new electric models over the next ten years, increasing the sales target for this segment from 15 million to a staggering 22 million, or an average of 2.2 million per year.

The German auto giant said about 11,000 of its employees will be eligible for retirement in the coming years, and it expects to achieve the bulk of the cuts through attrition.

The carmaker's Audi and Porsche brands made up the lion's share of VW Group's operating profit. Last year, the brand's operating margin fell to 3.8 percent, lagging peers such as Peugeot which delivered a margin of 8.4 percent. VW estimates the cuts, along with other measures, will net an annual savings of $6.7 billion by 2023.

The job cuts will be part of a savings drive aimed at slashing costs by 5.9 billion euros per year by 2023 at VW's own-brand division.

"We will significantly step up the pace of our transformation so as to make Volkswagen fit for the electric and digital era", said Ralf Brandstätter, chief operating officer for the VW brand. At the same time, the company plans to add 2,000 jobs in research and development.

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Volkswagen has ruled out compulsory layoffs until 2025, but early retirement of staff working in administrative positions at the company's headquarters in Wolfsburg, Germany, will help reduce the workforce by 5,000 to 7,000, it said.

VW's electric auto portfolio is limited at the moment, but the company hopes to sell at least 1 million battery-powered vehicles by 2025.

The first electric vehicle on the platform - the "ID" - will hit showrooms in 2020 and VW expects the launch edition to sell out, VW's board member for sales Juergen Stackmann said.

Volkswagen's push to launch so many electric cars is fueled partially by its adherence to the Paris Agreement.

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