VW AG has signaled it was willing to push for staff reductions at its core Volkswagen brand to reduce expenses and improve profitability, according to a Bloomberg report.

According to the report, brand chief Thomas Schaefer on Monday (27 November) told Wolfsburg plant labour representatives 2024 would be ‘difficult’ for VW because of intense pressure in several markets and below expectation orders for its electric vehicles.

“‘Business as usual’ will not be enough without noticeable cuts,” Schaefer said, according to internal documentation of the comments cited by Bloomberg. “We have to tackle the critical issues, including personnel.”

The report noted the automaker was working on a programme to boost profitability and better compete with rivals such as Stellantis and Tesla as falling demand in Europe and China add urgency to efforts to slim down bloated structures.

The VW group has spent millions of euros developing new platforms, powertrains for a new generation of ID. nameplate models and retooling German, US and Chinese factories to build them.

According to Bloomberg, CEO Oliver Blume wants the long struggling VW brand to deliver a sustained gain in earnings of about EUR10bn (US$10.9bn) by 2026. Success will partly depend on forging agreements with the company’s powerful labor unions.

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The brand needs to reduce excessive administrative costs and make its factories more productive, Schaefer reportedly said, adding that an agreement on the necessary measures should be reached this year.

“We are not making enough profit with our cars to finance the transformation and our future from our own resources,” Bloomberg quoted him as saying. “Other manufacturers would close plants in such a situation.”

The report said more details on the efficiency measures were expected to be communicated at a workers’ assembly on 6 December.

VW must make maximum use of partial retirement and other retirement options in the coming years, Gunnar Kilian, a board member responsible for personnel, reportedly said at the same event.