Insider at VW discloses explosive strategy: "Reduce significantly"
Volkswagen Announces Sweeping Restructuring Plan
Volkswagen (VW) has unveiled a comprehensive overhaul aimed at addressing its structural issues and positioning the company for success in the rapidly changing automotive sector. The plan, which includes drastic cost reductions, job cuts, and capacity reductions, is a response to plummeting profits and intense competition, particularly from China.
Implementing Major Restructuring and Capacity Reduction
VW has agreed to cut about 35,000 jobs by 2030, reduce production capacity by approximately 700,000 units, and close or downscale several plants. This move is expected to save €15 billion annually and address high domestic operating costs and excess industrial capacity.
Focus on Product Quality and Customer Trust
The restructuring also includes a focus on improving product quality and customer trust. VW's reputation for unreliable cars and reluctance to fix problems demands urgent improvement in quality control and after-sales service to regain customer confidence.
Managing External Cost Pressures
The company will also work to mitigate losses from external factors such as punitive US tariffs, which have significantly reduced profits and forced restructuring expenses. VW may consider diversifying production locations or renegotiating trade terms to address these pressures.
Accelerating Electrification Trends
As electric vehicles (EVs) sales grow, VW needs to invest smartly in EV infrastructure and vehicle development to compete effectively in the evolving market. The company faces challenges in forecasting demand, building supply capacity, and encouraging consumer behavior changes, but these hurdles will be addressed as part of the restructuring plan.
Improving Operational Leadership and Strategic Planning
Moving from reactive day-to-day management to strategic leadership that anticipates industry shifts is vital. VW will prioritize crucial initiatives, streamline fixed operations, and foster innovation and efficiency within the organization.
New Company Structure
A new structure is being considered for the company, with a holding company to be established within the next 12 months. The holding company would have a mini-board responsible for finances, models, and technology. Brands under the holding company would have more freedom to make decisions.
Pressure to Act
The management is under pressure to take action to avoid a potential future crisis. Several leading figures fear that if nothing changes, the next crisis is already knocking at the door. The core brand VW, along with other company brands, would be hung on the holding company on an equal footing.
Plant closures, including Emden and Zwickau, remain on the table for discussion. The company's commitment to change at all levels and the careful balance between cost cutting and investing for future growth will be key to the success of this restructuring plan.
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The new company structure will feature a holding company responsible for finances, models, and technology, as Volkswagen seeks to streamline its operations and improve its competitive standing in the business and finance world.
In an effort to address high domestic operating costs, excess industrial capacity, and losses from external factors such as punitive tariffs, Volkswagen plans to reduce production capacity by approximately 700,000 units and close or downscale several plants, aiming to save €15 billion annually.
