Volkswagen Job Cuts to Help Save Flagship Brand $4.37 Billion Next Year -- Update

By David Sachs

Volkswagen has reached a deal with workers on job cuts that will help the flagship brand save up to 4 billion euros ($4.37 billion) next year.

The German carmaker said that it aims to cut administrative staff costs at the Volkswagen brand by 20% as part of restructuring meant to slash group costs by EUR10 billion. With the move, the brand aims to reach its 6.5% profitability target by 2026 and contribute earnings of EUR10 billion that same year, it said.

The brand will extend its partial retirement plan to staff born in 1967 and maintain a hiring freeze, it said. Other measures include cuts to development times and procurement improvements. Staff reductions will start in January, the carmaker said.

Analysts expect the Volkswagen brand's earnings before interest and taxes to come in at EUR3.06 billion this year before falling to EUR2.28 billion in 2024, according to consensus estimates provided by FactSet. Last year, the brand posted EBIT of EUR2.65 billion.

The job cuts come as the United Auto Workers in the U.S. is recruiting workers at the company's Tennessee plant to unionize for higher wages.

Write to David Sachs at [e-mail]

(END) Dow Jones Newswires

December 19, 2023 10:19 ET (15:19 GMT)

Copyright (c) 2023 Dow Jones & Company, Inc.