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Europe’s largest automotive group, Germany’s Volkswagen, plans to benefit from major cost-cutting efforts at its brands as early as 2024, according to the group’s top executive on Friday.
“As early as next year, we plan to realize an effect of more than €10 billion [$11 billion] for the group through the performance programmes of our brands,” VW Group chief executive Oliver Blume told the Frankfurter Allgemeine newspaper on Friday.
Blume said efficiency gains from cuts would not have a one-to-one impact on earnings, but would at least help to offset expected burdens next year.
“2024 will be a very challenging year economically,” said Blume. He said the company hopes to stabilize during the year before “taking off” in 2025.
Blume set new profit targets for all of VW’s brands over the summer, which are expected to be met through a combination of savings and new revenue opportunities.
The core VW Passenger Cars brand has been a particular problem for the company. By 2026, the brand is expected to raise the return on sales to 6.5%.
In the first nine months of 2023, profits on sales for VW stood at 3.4%.
VW Passenger Cars leader Thomas Schäfer is currently negotiating with labour representatives on cuts.
“In order to increase our efficiency, we also need to reduce our workforce,” Blume said, although he declined to say how many jobs would be slashed.
He said the company would seek to use “socially responsible” ways to cut jobs, including through retirement packages.
The newspaper reported that labour talks would be held on December 6, with details to be presented at a VW management conference sometime before Christmas.
