Key Takeaways
- Volkswagen may be considering at least 15,000 job cuts as it struggles against tough competition.
- Jefferies analysts made that prediction after holding three days of talks with VW officials.
- Earlier this month, Volkswagen Group CEO Oliver Blume warned that the automaker needed to take drastic steps to stay competitive.
Volkswagen (VWAGY) may be set to slash at least 15,000 jobs, in an effort to cut costs as it battles against stiff competition.
That’s according to Jefferies analysts, who came to that view following three days of conversations with members of the German automaker’s management.
The management, the analysts said, “gave us conviction that there is no plan B that would rule out capacity reduction and that decisions could lead to provisions in a (3 billion euros-4 billion euros, or $3.34 billion-$4.45 billion) range as early as Q4.”
Jefferies added that VW is looking at shuttering between two and three facilities, with four to five sites in Germany being considered. That would mean the automaker will be producing 500,000 to 750,000 fewer units, it said.
Volkswagen Can Force Job Cuts, Jefferies Notes
The analysts argued that the unions will be under pressure to reach new contract deals while the company is in a position to force job cuts. They noted that even though there is a risk of plant disruptions, “unions can only strike on pay, not plant closure or layoffs if the latter are not contractually protected.”
VW has struggled lately as it faced stiffer competition, including from Chinese electric vehicle (EV) imports. Earlier this month, Volkswagen Group Chief Executive Officer (CEO) Oliver Blume warned that major spending cuts would be needed, and the automaker needs to “act decisively” to remain competitive.