VW cost-cutting drive aims to yield up to 4 billion euros in 2024

By Victoria Waldersee and Christina Amann

BERLIN (Reuters) -Volkswagen and workers’ representatives have agreed on the key points of a cost-cutting drive at the VW brand that should yield a positive contribution of 4 billion euros ($4.4 billion) to its results in 2024, the company said on Tuesday.

The steps, which aim to make 10 billion euros in gains by 2026 via cutting costs and boosting revenues, are the first in a series of programmes across the carmaker to improve productivity and stay competitive in the transition to electric vehicles.

In a memo to staff earlier this month, Volkswagen said it planned to slash administrative staff costs at its namesake brand by a fifth, save a billion euros by 2028 through reducing product development cycles to three years from 50 months, cut production times and scrap a planned new 800-million-euro R&D site in its home city of Wolfsburg.

Tuesday’s statement listed further cost-cutting measures including partial retirement for workers born in 1967, or 1968 for those with severe disabilities, to reduce costs particularly in the administrative personnel area.

The carmaker also planned to save 320 million euros a year through better purchasing performance in its procurement, generate over 250 million euros a year through optimising its after-sales business, and save over 200 million euros a year by improving production times.

A further 400 million euros annually would be saved by reducing the number of test vehicles used in technical development by up to 50%, with more testing done via digital processes, it said.

If necessary, the carmaker could also offer selective contract termination agreements across the company, human resources board member Gunnar Kilian said.

“With the agreement reached, we will create the necessary flexibility from 2024 to successfully secure the company’s profitability and thus sustainable employment,” he added.

($1 = 0.9130 euros)

(Reporting by Victoria Waldersee, Christina AmannEditing by Miranda Murray and Keith Weir)