VW to cut 4,000 jobs in IT overhaul

Volkswagen will let lapse 4,000 general and administrative jobs, while adding 2,000 IT positions over the next four years, avoiding layoffs at its German factories, as it negotiates a major shift toward electrification and self-driving cars.

The move, brokered with VW’s powerful unions, includes job guarantees through 2029.

The brand will rely on partial retirement and attrition to reach targeted staff reductions.

It is culling models and focusing on new technologies that require fewer factory workers.

With earlier job cuts, VW is on track with a plan announced in March to improve profit by €5.9bn a year, the unit’s chief operating officer, Ralf Brandstaetter, said.

“We are making the company fit for the digital age in a sustainable way.”

The prospect of deeper cutbacks had alarmed VW’s union leaders, as manufacturers wrestle with the transformation of sprawling industrial operations.

App-based services, like ride-sharing and car-sharing, are already threatening the industry’s traditional business model of individual car ownership, a trend that may accelerate once self-driving vehicles reach critical mass.

And electric cars require fewer parts and workers for assembly.

The extended job guarantee is “an important signal,” VW works council chief, Bernd Osterloh, said.

VW signed a broader labour pact in 2016 to cull 30,000 jobs worldwide, with Germany accounting for 23,000, to generate about €3bn in annual savings.

The VW car brand, which accounts for about half the group’s global deliveries, employs roughly 110,000 workers in Germany, out of a global workforce of 663,000 across the Volkswagen group, the world’s largest carmaker.

The unit has been pushing to rein in bloated expenses to lift profitability, which is trailing rivals like PSA Group; which owns the Peugeot, Citroen, and Opel brands.

Labour costs are a “big concern” that risk derailing a much-needed streamlining of operations, VW chief executive, Herbert Diess, told investors in March.

Mr Diess, who also heads the VW brand, has been scrapping slow-selling vehicles and car variants to reduce complexity.

He’s also seeking to shake up a bloated bureaucracy at the group and give the various units more autonomy.

VW will start producing the first model of its all-electric ID car range toward the end of this year.

Bloomberg