The German carmaker plans to cut thousands of jobs in South America as a part of a restructuring plan. Volkswagen has a long and controversial history in Brazil in particular, where it produced the Beetle for decades.
German auto maker Volkswagen intends to cut 7,000 jobs in South America within the next five years, announced its Brazilian subsidiary, Volkswagen do Brasil, on Friday.
5,000 jobs are expected to be cut in Brazil and an additional 2,000 in Argentina, where VW is struggling to sell. Volkswagen has deep ties to the region since opening its first plant in Brazil in 1957. That plant produced 3 million units of the famous Beetle, known as the Fusca in Brazil. Another model, the Gol, became the most-sold car model in Brazil. VW had a controversial relationship with the Brazilian government during the military dictatorship between 1964 and 1985 and hired an external historian to look into the actions committed by the car maker under the regime.
Volkswagen's announcement comes as the storied carmaker continues to recover from the emissions scandal that has dogged its reputation since admitting to manipulating diesel engine emissions tests in September 2015. The 7,000 job cuts are but a part of the largest revamp in the company's history. About 30,000 jobs will be cut overall by VW by 2020.
"I am very sorry for those affected, but the situation of the brand at the moment gives us little room to maneuver,” said Volkswagen brand chief Herbert Diess at Volkswagen headquarters in Wolfsburg on Friday.
The deal took months of negotiations with workers' representatives and will lead to annual savings of 3.7 billion euros ($3.9 billion) by 2020. This will allow the automaker group to invest in electric vehicles. VW pledges to create 9,000 new jobs in battery production and mobility services. "We have to invest billions of euros in new cars and services while new rivals will attack us,” said Diess.
About 23,000 of the job cuts will take place in Germany and occur mostly through attrition and temporary job losses. But the cuts may not be enough to stay among the top car makers. "The cuts are too small to make VW cost competitive with Toyota and other global rivals,” said University of Michigan professor Erik Gordon.
German auto maker Volkswagen intends to cut 7,000 jobs in South America within the next five years, announced its Brazilian subsidiary, Volkswagen do Brasil, on Friday.
5,000 jobs are expected to be cut in Brazil and an additional 2,000 in Argentina, where VW is struggling to sell. Volkswagen has deep ties to the region since opening its first plant in Brazil in 1957. That plant produced 3 million units of the famous Beetle, known as the Fusca in Brazil. Another model, the Gol, became the most-sold car model in Brazil. VW had a controversial relationship with the Brazilian government during the military dictatorship between 1964 and 1985 and hired an external historian to look into the actions committed by the car maker under the regime.
Volkswagen's announcement comes as the storied carmaker continues to recover from the emissions scandal that has dogged its reputation since admitting to manipulating diesel engine emissions tests in September 2015. The 7,000 job cuts are but a part of the largest revamp in the company's history. About 30,000 jobs will be cut overall by VW by 2020.
"I am very sorry for those affected, but the situation of the brand at the moment gives us little room to maneuver,” said Volkswagen brand chief Herbert Diess at Volkswagen headquarters in Wolfsburg on Friday.
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| Volkswagen plans to invest the savings from the job cuts into electric vehicles |
The deal took months of negotiations with workers' representatives and will lead to annual savings of 3.7 billion euros ($3.9 billion) by 2020. This will allow the automaker group to invest in electric vehicles. VW pledges to create 9,000 new jobs in battery production and mobility services. "We have to invest billions of euros in new cars and services while new rivals will attack us,” said Diess.
About 23,000 of the job cuts will take place in Germany and occur mostly through attrition and temporary job losses. But the cuts may not be enough to stay among the top car makers. "The cuts are too small to make VW cost competitive with Toyota and other global rivals,” said University of Michigan professor Erik Gordon.
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