Volkswagen says 20,000 workers agree to early departures

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Volkswagen AG said about 20,000 employees will voluntarily leave the company by the end of the decade as the carmaker restructures its German operations to cope with uneven demand for its vehicles.

The result shows that the company’s restructuring plans are on track, Gunnar Kilian, Volkswagen’s head of human relations and board member, told employees Tuesday at a workers assembly in Wolfsburg.

“With measurable progress on factory costs in Wolfsburg and socially responsible job cuts at Volkswagen AG’s six German sites alone, we are accelerating our transformation,” Kilian said. “Around 20,000 departures from the company by 2030 have already been contractually agreed.”

Europe’s largest carmaker is in the process of reducing production capacity and headcount in Germany due to rising costs, weaker demand in Europe and the rapid rise of Chinese competitors.

VW brand management and labor leaders struck a deal in December to cut German production capacity by more than 700,000 units and decrease headcount by 35,000 jobs by the end of the decade. Sister brands Audi and Porsche are also cutting jobs to reduce costs.

The VW brand has more than 120,000 employees in Germany. The 35,000 targeted cuts represent about a quarter of the brand’s workforce and roughly 12% of Volkswagen group’s employees in the country.

Workers have agreed to leave the company by 2030 via early retirement, normal retirement or termination agreements. The bulk of the voluntary departures are retirements, though the carmaker has so far declined to say how many workers agreed to severance packages, for which it set aside €900 million last year.

Employees also heard from the VW brand’s chief financial officer, David Powels, who said the company needed to address “excessive investment, low returns on electric vehicles and a break-even point that is too high.”