20 hrs ago
Volkswagen shares rise as board approves sweeping cost reductions
Volkswagen is a large car company facing tougher competition and higher costs.
Its board approved a plan to save money and make decisions faster.
The company plans to reduce its workforce by 50,000 people.
It also plans to stop production at four German factories between 2031 and 2034.
Volkswagen wants to reduce its car models from about 150 to roughly half that number.
China has become especially difficult because local companies are selling many new cars at low prices.
Higher US tariffs on cars imported from Europe have added another challenge.
Investors liked the board’s decision, and Volkswagen shares rose 6%.
Volkswagen shares rose 6% after its board approved a major cost-cutting plan.
The plan targets 50,000 job reductions and a streamlined management structure.
Volkswagen currently plans to phase out production at four German plants between 2031 and 2034.
The company aims to halve its roughly 150-model lineup to reduce fixed costs.
Volkswagen’s first-half profits fell 31% to €3.1 billion amid Chinese competition and higher US tariffs.
- Who
- Volkswagen, led by CEO Oliver Blume, and its board of directors.
- What
- The board approved sweeping cost reductions, including 50,000 job cuts, four planned plant production phase-outs, and a smaller model lineup.
- Where
- The affected plants are in Emden, Zwickau, Hannover, and Neckarsulm, Germany; the challenges also involve China and US tariffs.
- When
- The board approved the plan on Thursday, and shares rose on Friday; plant production phase-outs are currently planned for 2031-34.
- Why
- Volkswagen is responding to fierce Chinese competition, a more than 20% decline in the Chinese market, excess production capacity, and higher US tariffs.
Key facts
- Share reaction
- Volkswagen shares rose 6% on Friday.
- Planned job reductions
- 50,000 positions, including management and assembly-line jobs.
- Planned plant changes
- Production is currently planned to phase out at four German plants during 2031-34.
- Model lineup
- The company plans to reduce its roughly 150 models to about half that number.
- First-half profit
- €3.1 billion, down 31% from the comparable period.
- Current workforce
- Approximately 650,000 employees.
- Earlier restructuring
- Volkswagen said 37,000 headcount-reduction contracts had already been signed, mainly through early retirement.
Quotes
Deutsche Bank analysts
Analysts at Deutsche Bank commenting on Volkswagen’s board decision
“it removes one of the biggest investor concerns: whether the company is still capable of making the difficult decisions required to address them.”
CNBC TV 18
Sources
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