Volkswagen invests in a leaner, cleaner future

November 21, 2016

Volkswagen Group has launched a massive restructuring programme as it prepares to launch 30 electric vehicles (EVs) by 2025.

The strategy has two key elements. Firstly, cost cuts will help the company fund the rising bill for the diesel emissions crisis. This will include 23,000 job cuts at the core Volkswagen brand and a global efficiency drive to save €3.7 billion annually by 2020.

Job cuts in Germany will be achieved through early retirement and reducing part-time staff to avoid forced redundancies, following discussions with unions.

A global jobs review is also planned, but details have yet to be announced. About 114,000 employees work for Volkswagen in Germany. The company employs 624,000 people globally.

The second part of the strategy is investment. A €3.5 billion programme will lay the foundation for the transformation of Volkswagen from a pure carmaker into a mobility provider over the next three years. In Germany, there will be 9,000 new jobs focused on EVs and mobility, many of them filled by retraining the current workforce.

Dr Herbert Diess, head of Volkswagen, said: ‘Volkswagen will be taking a major step forwards. We will be transforming the entire brand.’

Matthias Müller, Volkswagen Group chief executive, said: ‘We are setting the course for the Volkswagen Group of the future. In order to become a global provider of sustainable mobility, we are pressing ahead with projects such as electromobility, digital connectivity and new mobility services.’

The company will have to balance its future ambitions with managing the current diesel emissions crisis over the next few years.

It has set aside €18 billion to cover the expected costs related to emissions cheating.

In an interview published during the weekend, Müller resisted calls to extend a US compensation scheme to Europe for drivers affected by the emissions scandal.

However, he is coming under increasing political pressure from European authorities which want to impose some form of financial sanction on the carmaker.

Yesterday, the Mayor of London demanded that Volkswagen pay £2.5 million (€2.8 million) in compensation for ‘lost’ revenue because owners of its affected cars were claiming discounts on congestion charges they were not entitled to.

It is estimated that 80,000 Volkswagens registered in London were fitted with ‘defeat devices’.

Mayor of London Sadiq Khan said: ‘There is no excuse for the utter lack of action Volkswagen has taken in London since the 'dieselgate' scandal came to light.’

In a statement, the carmaker responded: ‘Volkswagen products perform well in independent real-world emissions testing against new cars in general. It is therefore difficult to understand why our products might be singled out for pollution penalties.’

Volkswagen Group could also face demands from European governments for compensation for underpayment of car taxes, as many are linked to vehicle emissions.

Last year, Volkswagen Group indicated it would compensate for tax revenue losses in Germany related to the wrong classification of vehicles, but over the weekend the carmaker said it expects the government to refrain from seeking back taxes.

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