Volkswagen brand to cut up to 7,000 jobs in new savings drive

Volkswagen Golf 3

The German auto giant said about 11,000 of its employees will be eligible for retirement in the coming years, and it expects to achieve the bulk of the cuts through attrition.

Volkswagen has struggled to raise profitability at the VW brand for years.

A Volkswagen badge on a production line at the Volkswagen plant in Wolfsburg, Germany, March 1, 2019.

The job cuts will be part of a savings drive aimed at slashing costs by 5.9 billion euros per year by 2023 at VW's own-brand division.

The vehicle maker announced. At the same time, the carmaker will create some 2,000 new jobs in Technical Development, more specifically in electronics architecture and software.

Volkswagen announced this week a plan to eliminate up to 7,000 jobs at its namesake brand.

Chief operating officer of the VW brand Ralf Brandstaetter said in a statement the changes would "make Volkswagen fit for the electric and digital era".

As a result of the electric cars model ramp up, Volkswagen expects to build 22 million cars on its electric vehicles platforms PPE and MEB by 2028, up from the carmaker's previous estimate of 15 million cars.

The company is pivoting to electric vehicles as it seeks to comply with new limits on carbon dioxide emissions in Europe, and a push by China for more low-emission vehicles.

But the enormous investments needed are already weighing on performance and profit margins.

The cuts are meant to lift the brand's profit margins to 6 percent, up from 3.8 percent a year ago.

The new losses come on top of previously announced plans to cut the company's global workforce by 30,000 by the end of next year.

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