Ramla SoniVolkswagen is cutting costs – and offering early retirement to older employees – to help it raise profit margins in the coming years.
This comes a day after it outlined its ambitious electric mobility expansion to build half a dozen battery cell plants in Europe and expand infrastructure for charging electric vehicles globally, in efforts to overtake market leader Tesla.
Volkswagen aims to more than double deliveries of electric vehicles to one million this year, adding it would also apply a standardised platform model to software, batteries and charging.
“Our good performance in 2020, a year dominated by crisis, will give us momentum for accelerating our transformation,” CEO Herbert Diess stated.
Volkswagen confirmed it aimed for an operating margin of seven to eight per cent by 2025, adding it would likely end 2021 at the upper end of a 5-6.5 per cent target.
This will be achieved by lowering fixed costs by €2bn ($2.3bn, £1.7bn) by 2023 compared with 2020, a decline of five per cent, as well as a decline of seven per cent in materials costs over the same period.
To further handle personnel costs, Volkswagen is offering early or partial retirement to older employees, which could cut up to 4,000 jobs at its plants in Germany.
The group employs about 670,000 staff worldwide.
Preferred shares in the company rose as much as five per cent to their highest level since July 2015 – they are up more than a third in the year-to-date – giving the carmaker a market valuation of more than €116bn.
