VW agrees 23000 German job-cut deal to revive core brand

English edition of Asharq Al-Awsat – the world’s premier pan-Arab daily.

Currently, the carmaker employs around 610,000 people in 31 countries, 120,000 of those in its home land.

WOLFSBURG, Germany- Volkswagen AG announced a sweeping restructuring of its embattled VW passenger-car brand including up to 30,000 job cuts over five years, part of efforts to boost profits in the wake of the company’s damaging emissions-cheating scandal.

“The most important message is the jobs of the core workforce is secure”, VW’s works council chief Bernd Osterloh said at the news conference in Wolfsburg, where the company has its headquarters.

Dr. Herbert Diess, Chairman of the Brand Board of Management of the VW Group, said: “With the pact for the future, Volkswagen will be taking a major step forwards”.

5,000 jobs are expected to be cut in Brazil and an additional 2,000 in Argentina, where VW is struggling to sell. The firm also plans to create additional 9,000 jobs by investing in electric vehicle technology.

We are tackling the problems at the root, even if it’s painful.

The company said that the plan is the most radical in its history. The company has admitted that 11 million diesel cars, including 500,000 in the United States, were equipped with software that camouflaged emissions of poisonous and environmentally damaging nitrogen oxides that were far above legal limits.

The company fitted its cars with so-called “default devices” – software that detected when cars were being tested in lab conditions and adjusted the car’s settings to make it more fuel efficient. The unit accounts for nearly half of the group’s sales and was struggling even before the emissions crisis erupted past year, tarnishing the marque’s reputation and burdening the 12-brand group with at least €18.2bn in costs for fines and repairs.

VW, still dealing with the aftermath of the emissions-cheating scandal, aims to rejuvenate its core brand, and develop new electric and self-driving cars.

In the pipeline since June, the manufacturer and its trade union’s agreement will save the VW Group a projected €3.7 billion (£3.2bn) a year, the release said.

Europe’s largest automaker faces the hard task of having to find billions of euros to front the costs related to its emission scandal while simultaneously keeping costs under control.

Among other things, VW has since agreed to a $15 billion settlement that includes $10 billion to buy back about 475,000 vehicles sold in the USA that were equipped with a 2.0-liter turbodiesel.