Electrification will lower the need for personnel, so VW could cut or reduce some shifts. There is still no job cuts program because the large number of employees nearing retirement could be enough to reduce the workforce.
The first European automotive group is at a crucial stage, due to the great competition on the electric car market, especially in China, still its largest market. The company’s five-year spending plan rose, just three months ago, to 180 billion euros (122 billion) largely to support the development of software, the range of electric vehicles and to try to reverse the trend of declining market share in China, where Volkswagen was surpassed for the first time by a local player, BYD.
Details of the plan and synergies
The plan will be developed on two levels, the first including the main areas of action within the brand: administration, technical development, material costs, products, price/mix, vehicle construction, sales and quality. As explained in a note, each area will pursue specific objectives and measures and thus contribute to achieving the programme’s objectives in terms of costs and revenues. The second level predicts that projects that span multiple action areas will ensure greater efficiency and increase profits.
The focus here will be on aspects such as reducing complexity and number of variants, sales model, reducing bureaucracy, as well as product and yield optimization in the two main toolkits, the Modular Transverse Toolkit (MQB) and the Modular Electric Drive Toolkit (MEB). In particular, it is explained that the brand will focus on models that have higher volumes.
For example, the Vw Arteon model will cease to be produced, while in terms of complexity reduction, the ID.7 model will have 99% fewer possible configurations than the Golf 7. Furthermore, the company intends to optimize the use of vehicle capacity plants in order to increase profitability and be able to respond more flexibly to demand and market fluctuations in the future.