Volkswagen’s uncertain future

A few days before Christmas 2024, Volkswagen reached an agreement with trade unions in reducing more than 35,000 jobs in 2030 and gradually reducing management salaries. The agreement was completed after the 70 -hour negotiations with the labor representative, helping the largest automobile manufacturer in Europe to save about 4 billion euros (4.2 billion USD) per year. Of which, 1.5 billion euros came from dismissal and salary reduction.

Brand Executive Director Thomas Schaefer describes the plan will bring development costs and labor to competition. “These are difficult decisions, but also important decisions for the future,” he said.

However, no one can imagine what the future of the upcoming Volkswagen will be, from the implementation of the planning plan, restructuring the operation to increase the profit margin, competing with China and racing to the car. electricity.

Theo Reutersdespite talking a lot about revolutionary changes, Volkswagen’s agreement and trade union still depends on the tradition of cooperation between managers and workers, such as “looking for a new era by the old method” .

Accordingly, representatives of trade unions and companies at each factory will have a goal of reducing their own costs. They are responsible for finding ways to implement and improve productivity, measured by the number of cars produced on each worker.

High level from both sides will report progress at the quarterly meeting. If the goal is not achieved, they re -negotiate. This is a settlement model bearing the traditional compromise that the German automaker has made in the past.

Previously, Volkswagen promised in 2016 to cut 30,000 jobs but could not reduce the total number of workers – about 120,000 people – for recruiting more employees in other fields.

This time, the company expects to achieve the goal of reducing 35,000 jobs but not fired, by not recruiting new retired workers and providing early or partial retirement programs. In general, there is no new way of making some analysts asking whether the company can fulfill the promise.

“People are no longer patient to invest in a car stock but mainly trading based on future income, in the hope that in the next 3-5 years the company will restore profitability,” Patrick Hummel, an analyst at UBS. According to him, what investors need is about the basic factors affecting cash flow in 2025.

In addition to the plan to reduce people, the way of cutting capacity is also a question mark. As planned, they will stop production in 2025 at a factory in Dresden, where 300 workers, and in 2027 at an Osnabrueck factory, where about 2,300 workers. However, the company is committed to finding alternative activities for these locations, which may include sale to new investors.

The electric car factory in Zwickau will also reduce a production line but are newly invested in the form of recycling gasoline and electric vehicles used, expected to operate since 2027. However, new investment new investment Still depending on the achievement of cost reduction goals, according to the Financial Director Arno Antlitz.

The remaining power cuts will come from cutting two production lines at the company’s headquarters at Wolfsburg. Volkswagen said the plan will save $ 15.6 billion in “medium term” without providing specific details. This makes investors and analysis unclear how the options will reduce the fixed costs compared to the complete closing of factories.

Volkswagen has 10 brands – including the main brand, Volkswagen, with Audi, Porsche and Skoda. Financial statements in the third quarter of 2024, in the first 9 months of this year, the Group sold 12.9 million cars, down compared to 16.2 summons in the same period 2023, net profit reached 8.9 billion euros, decreased more 30% compared to the same period 2023.

The leader of the Group said the situation at the Volkswagen brand – with about 120,000 domestic workers – is “serious” and needs emergency action. However, Stephen Reitman, analyst at Bernstein Research, said it was difficult to understand when comparing the tension people witnessed with the final agreement that Volkswagen achieved, because it did not show the determination as expected.

There are still many questions, from how the company reduces the number of workers without firing anyone, until the reduction of production capacity is implemented and the long -term future of blank factories How, follow Reuters.

Other big questions about production costs, export opportunities and electric vehicles competing with China have not had a clear answer.

The largest automobile manufacturer in Europe repeatedly emphasized that their cost is too high and the profit margin is too low, especially for the core brand of Volkswagen of the same name.

High electricity price, has increased since the energy crisis caused by Ukraine conflicts, as well as increasing labor costs are a significant challenge for the Group, according to the corporation, according to AFP. Stefan Bratzel, a German auto expert, said the company needs to be “much more streamlined” because there are “too many employees who do not work hard and too many committees”.

Moritz Kronenberger, Investment Management at Union Investment, Volkswagen Shareholders, said that the CEO of Volkswagen Group Oliver Blume is taking the right measures. “But the cost structure of the company needs to look very different in the next two years. Volkswagen must prove that they have been equipped with weapons for the future and can create attractive products,” he said.

However, the “weapon” of electric cars seems not strong. The group has poured a lot of money into the conversion process to electric cars but this process is difficult. They have launched an ID line, such as ID.3 but have a problem with software.

Chinese consumption, which accounts for a third of sales, is greatly affected by the geared economy and fierce competition from local competitors, especially in electric vehicles. Manufacturers like BYD have gained market share, with the best -selling cars that integrate attractive technology when Volkswagen still struggles with the conversion process, according to AFP.

At this time, it is difficult to expect bold, fast or breakthrough ideas at a car giant, partly due to a close relationship with the state. According to AFPpolitics play an important role in Volkswagen. Lower Saxony – where the Group’s Wolfsburg headquarters are located and some factories – holding 20% ​​of the voting shares.

This means that the state government can prevent important decisions. In addition, the Trade Union representative in the Supervisory Board has the right to veto the establishment and relocation of production locations. Therefore, it is almost impossible to close the factories if they don’t want. Automobile expert Ferdinand DudoHoeffer said that this “hinder the company’s adaptability” and means Volkswagen acts as “a state company”.