30,000 Jobs on the Line, As Volkswagen Tries to Resurrect its Image

By SiliconIndia   |   Tuesday, 22 November 2016, 05:01 Hrs
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BENGALURU: Volkswagen has decided to cut down 30,000 jobs in an effort to resurrect its image after the scandal over cars rigged to cheat on diesel emission tests. The German carmaker said that the cuts were a part of the long term plan to increase profitability and gradually shift to electric powered vehicles and digital services.

The cuts should help the company with an annual savings of €3.7bn by 2020. Volkswagen and the unions have been trying hard to work out a deal to revive the sagging fortunes of the company after the scandal.

According to Matthias Mueller, CEO, it was “the biggest reform package in the history of our core brand.” The current layoffs mark a difficult year for the company which was embroiled in an emission-rigging scandal, which dented the company’s reputation worldwide.

The scandal marked the beginning of a change that looked at the long standing problems of high fixed cost at the manufacturing locations in Germany and the hierarchical structure of the company, which according to many led to the cheating.

Volkswagen has a workforce of more than 600,000 employees worldwide but the cuts are more likely to affect the strong German contingent of 120,000. It is also likely that the job cuts will take place in Brazil and Argentina.

The figures bring out a stark difference between Volkswagen and other leading carmakers in the world. Volkswagen sells nearly the same number of cars as Toyota and General Motors, but Toyota does it with 349,000 workers and GM with 202,000.

The company said that it aims to cut non-essential costs and shift focus toward battery-powered cars and internet-based services such as car-sharing and ride-sharing.

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