Volkswagen may cut up to 25,000 jobs over the next decade in an effort to cut costs as the German automaker attempts to rebound following its massive diesel emissions scandal.
Volkswagen announced a massive re-organization as part of what it has dubbed “TOGETHER-Strategy 2025.” The company is planning to roll out 30 battery-electric vehicles across its 12 divisions. To achieve its goal to shift towards electric-powered vehicles, the company will have to make cuts in other areas.
According to Reuters, the company is under pressure to make cuts at high-cost operation centers in Germany in order to finance new partnerships. The company said that a lot of its staff is from the baby boomer generation, and so the preferred option is to wait for its older workers to retire instead of laying off younger employees.
Executives from the automaker have been discussing cost-cutting strategies with work councils and its division chiefs since June. The company is banking on the assumption that enough of its older workforce retires by 2025 to avoid actual layoffs.
“We have the huge benefit of the baby boomer age groups. Thats why we can also say the jobs of Volkswagen workers are safe,” Volkswagen’s labor representative, Bernd Osterloh, told German news outlet Handelsblatt Wednesday.
Another potential option is to move some of its older workers into an “early retirement” program, which Fortune Magazine said could save Volkswagen $2.7 billion. The automaker has faced a massive decline in sales as it reels from revelations that it lied to regulators regarding emission standards.
The most important line item for investors in the automobile industry is the gross operating margin on sales, according to Car and Driver. Volkswagen’s margin in 2015 was approximately 6 percent, and the company is aiming to hit a margin between 7 and 8 percent by 2025.
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