Volkswagen facing significant challenges as it works towards financial stability – report
09/06/2024 01:09 AM
VW's finance boss warns workers it only has 'one, maybe two' years to react to changing market conditions.
According to a report online, Volkswagenis running on borrowed time as struggles in the transition to electric cars with "one, maybe two" years to turn things around.
The timeframe is described by Reuters, which attributes the quote to Volkswagen finance boss Arno Antlitz at an assembly with 25,000 workers discussing cost-cutting concerns.
This gathering comes after reports surfaced earlier this week that the German car-making giant might be forced to close factories in response to the changing automotive landscape.
"The market is just not there," Antlitz told workers according to Reuters, and that there was "one, maybe two" years of lead time to reduce costs and vehicle production in line with new market demands.
Per Reuters, the executive was "heckled with shouts of 'Auf Wiedersehen'" from workers, which translates to 'goodbye' in German.
Antlitz continued to explain that post-pandemic, the European car market has contracted, and Volkswagen has projected a shortfall in demand of about half a million cars for the region.
China has also played a role here, not only flooding Europe (and other regions) with a deluge of affordable electric cars, but interest has shifted away from big-name brands like Volkswagen to domestic names like BYD in the world's largest automotive market.
"There are no more cheques coming from China," Volkswagen CEO Oliver Blume reportedly said at the gathering.
Volkswagen is seeking to achieve a 6.5 per cent profit margin in the next 18 months, up from 2.3 per cent in the first half of 2024, and is looking to remove job guarantees, pay raises, and factory closures to get there, according to Reuters.
In response to Volkswagen, Works Council boss Daniela Cavallo said the car maker had "massively damaged trust", and the worker's union could be considering strikes if wage negotiations do not go the way of the non-executive employees.
The viewpoint of the union is that Volkswagen has been too slow to market with a mass-market electric vehicle (EV) and that its "production strategy was inefficient", according to the report.
Volkswagen's most affordable ground-up electric car, the ID.3 has been produced since late 2019 on the brand's MEB platform.
However, Volkswagen Australia did not announce it as part of its new-model wave arriving locally by the end of 2025.
Instead, Volkswagen will first launch the platform-sharing ID.4 and ID.5 mid-size SUVs in more popular segments, alongside the ID. Buzz (priced from $79,990 before on-road costs) due towards the end of the year.
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