Home Business & TechEconomy Volkswagen Boss Admits The Company Is Losing Competitiveness

Volkswagen Boss Admits The Company Is Losing Competitiveness

by Marcellin Gasana
11:54 am

A VW car. The company said its competitiveness is under threat

Part of the VW massive $10.9 billion savings program will include partial and early retirements, the company boss was quoted as saying.

“For a long time, Volkswagen has been a dominant force in Europe. The popular Golf used to be the best-selling car on the continent for years, but things have changed in recent years,” motor1.com reports quoting Reuters.

Toyota is growing stronger and with Stellantis having so many brands under the same corporate umbrella, its influence is rising. Add into the mix Renault’s revitalized portfolio and upcoming cheap Electric Vehicles like the 5 and 4, VW certainly has reasons to worry.

On top of that, Hyundai and Kia have a diverse portfolio while Chinese brands are bringing more of their affordable electric cars.

In the People’s Republic of China, VW has been forced to offer big discounts to remain competitive, therefore lowering its profit margins. Lest we forget the coronavirus pandemic and Russia’s invasion of Ukraine wreaked havoc on VW’s supply chain, creating huge bottlenecks.

The Wolfsburg-based automaker has yet to fully recover, and the future isn’t looking great. In June, the company announced plans to cut costs by a massive €10 billion ($11B), and now Reuters reports VW CEO has admitted the company is no longer competitive.

The news agency got a hold of a post published by VW on its intranet in which CEO Thomas Schäfer said: “With many of our pre-existing structures, processes and high costs, we are no longer competitive as the Volkswagen brand.”

The statement was allegedly made at a staff meeting held in Wolfsburg during which Gunnar Kilian, a member of the board of management responsible for human resources, said some of the savings would be achieved with partial or early retirements.

The cost-cutting plan will be finalized by the end of this year and Kilian said the majority of savings will be realized through other measures. VW needs the money to build its electric future and roll out the SSP platform that will underpin a variety of models, including the ninth-generation, electric-only Golf.

The Volkswagen Group is one of the world’s largest private employers. In its December 31, 2022 report, the Group said it employed a total of 675,805 people, which includes the Chinese joint ventures. This figure represents a 0.4% increase compared with the end of 2021. The ratio of Group employees in Germany to those abroad remained largely stable over the past year; at the end of 2022, 293,862 (295,065) employees worked in Germany.

Whether the alleged VW’s plans to cut jobs could affect Volkswagen Mobility Solutions Rwanda, is a question we did not get answered, as its Chief Executive Officer, Serge Kamuhinda, could not answer the phone for comments.

Volkswagen Mobility Solutions Rwanda is a privately held automotive industry located in Kigali Special Economic Zone. It was founded in 2018 with its staff sized between 201 – 500 employees. It specialises in VW cars such as, Polo, Passat, Teramont, Amarok, and Move Products.

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