**: Zhongguancun**.
The Volkswagen Group has reached a preliminary agreement with union leaders on its €10 billion cost reduction plan, a move that will help boost the profitability of the Volkswagen brand. After months of negotiations, the two sides reached a consensus. Specifically, this includes cutting one-fifth of personnel costs, especially for administrative positions, and offering early retirement options for employees aged 57 and over.
The Volkswagen Group aims to more than double the return of its brands (excluding Audi, Skoda and Seat) to 65% to outperform competitors such as Stellantis. To achieve this, the Volkswagen Group has taken a series of measures, including a hiring freeze, layoffs of temporary workers, and a reduction in production shifts. These strategies were developed by CEO Oliver Blume to improve the struggling Volkswagen brand's bottom line, a goal that has become more challenging amid lower-than-expected demand for electric vehicles.
The Volkswagen Group said it expects the planned measures to quickly cut costs and save 4 billion euros next year. This will be achieved by reducing the development time for new Volkswagen models from 50 months to 36 months, with an estimated savings of more than 1 billion euros by 2028. In addition, the Volkswagen Group plans to reduce the cost of digital testing and procurement.
In the third quarter of this year, Volkswagen's return on sales was 6.2%, well below the group's long-term target of more than 10%. As a result, the Volkswagen Group has accelerated its global cost reduction efforts. Reaching an agreement with the union leadership is crucial for the Volkswagen Group, as workers' representatives from major German companies make up half of the seats on the supervisory board, and they have the power to block measures that could threaten jobs or wages.
It is worth mentioning that at a time when the global auto market is generally facing a decline, Volkswagen achieved nearly 1.7 million car sales in the first three quarters and maintained stable profitability. However, in the process, some problems have also been exposed, such as the decline in the market share of some products and the slow transition to electrification.
Therefore, in the coming years, Volkswagen will need to continue to strive to improve its products and technological innovations in order to cope with the increasingly competitive environment. At the same time, it is also necessary to be more refined and precise in human resource management and cost control to achieve sustainable development and improve market competitiveness.