Volkswagen to cut 7,000 jobs in Germany

Moving past its scandal-marked period of last 14 months, Volkswagen along with its labor unions have agreed to cut about 7,000 jobs, primarily in Germany.

These job cuts will be a result of automation and removal of redundancies in the automotive sector. As a part of the company’s restructuring efforts, resources will be diverted towards research and development and overcoming the operations failure that led to the scandal surrounding diesel emissions more than a year ago.

“We have to invest billions of euros in new cars and services while new rivals will attack us--the transformation will surely be more radical than everything we have experienced to day,” said Herbert Diess, VW brand CEO, in a press statement.

The German company plans to focus on manufacturing electric cars over the next few years and free up about $9 Bn in order to boost the research required to carry out these ambitious goals. According to the press statement, Volkswagen’s recent job cuts are a result of automating redundant tasks and a revamp of administrative responsibilities.

Moreover, about 11,000 employees at Volkswagen are set to retire between now and 2023. Thus, most of the job losses will take place through attrition due to retirement and not hiring replacements.

As international competitors enter the arena of producing electric cars, this is Volkswagen’s way of throwing its hat into the ring.