(ZeroHedge)—German business news outlet Manager Magazin reports that Volkswagen CEO Oliver Blume is eyeing a major restructuring that could eliminate as many as 100,000 jobs. The latest VW earnings show just why: Europe’s largest automaker remains bloated in a world of weak demand, a softening Chinese market, rising Chinese competition in Europe, and low margins.
“Volkswagen CEO Oliver Blume is getting serious. He plans to drastically intensify job cuts, actually phase out production at four German plants, and spin off the VW brand into a new company. Volkswagen is to become a new company,” Manager Magazin wrote in the report.
If fully implemented, the 100,000-job reduction would eliminate about 15% of Volkswagen’s current global workforce of 650,000. Bloomberg data shows VW went on a hiring spree between 2008 and 2020.
Now, it appears a generational high has been reached in VW’s workforce, as a shift toward efficiency, automation, and AI could soon result in massive job losses. We’re sure lefty unions will be furious.
Manager Magazin also noted that Blume plans 11 billion euros in cost cuts by 2030, which could include spinning off component operations and the core VW brand.
The restructuring plan will be presented to the supervisory board next month and is expected to face intense resistance from labor unions and Lower Saxony lawmakers, who hold significant influence over the company’s governance.
The urgency behind a restructuring stems from deteriorating earnings: its first-quarter revenue fell 2.5% to 75.7 billion euros, while operating profit dropped 14.3% to 2.46 billion euros, and the operating margin slipped to 3.3% from 3.7%. Earnings after tax fell 28.4% to 1.56 billion euros, while vehicle sales fell 6.9%, and deliveries were down 4%.
A Volkswagen spokesperson told the Hamburg-based outlet that the struggling car company “must undergo profound change.” The executive board “has been working intensively over the past few months on a future-oriented plan to realign the company.”
Shares in Germany slipped 34 basis points following the report and remain down 25% on the year. The stock is trading at 2010 levels…
The implosion of VW tells you all you need to know about Europe’s crumbling industrial base at a time when war is still raging, and in fact accelerating, in Ukraine. Time to convert unused civilian vehicle production lines into interceptor missile production.
