At this time in the history of the global automobile and car manufacturing industry, such a big and shocking news is coming out, which has created panic in the financial markets and corporate corridors around the world. Volkswagen, the largest and most prestigious car manufacturer in the German automobile sector, has taken a very tough and big decision with the aim of drastically reducing its expenses and completely strengthening its internal system. According to the official information given by the company, Volkswagen Group is going to lay off about one lakh employees from its total workforce in a phased manner in the coming few years i.e. by the year 2030. This is considered to be the largest and most comprehensive restructuring campaign in the history of the automobile industry, which is expected to have a direct impact on millions of families associated with the company and the global labor market. Let us tell you that some time ago the company had made a preliminary announcement of cutting about 50 thousand employees from its various plants, but now in view of the seriousness of the situation, a big and tough decision has been taken to double this figure and eliminate about 50 thousand more posts. Thus, the overall layoffs constitute about 15 per cent of the group's total workforce, which reflects the serious economic challenges and strategic changes the auto sector is going through. Premium brands like Porsche, Lamborghini, Bentley and Audi under Volkswagen Group will be directly affected. Volkswagen Group, which has global dominance in the field of car manufacturing, has a huge portfolio of many world famous and luxury brands across the world. The scope of this huge group includes legendary and expensive brands like Skoda, Seat, Porsche, Cupra, Bentley, Audi and Lamborghini, under which a total of more than 6.5 lakh employees are providing their services all over the world. This big decision of retrenchment and restructuring of employees on such a large scale is bound to have a direct and deep impact on the functioning of all these premium and mass-market brands. Under this new strategic plan made by the company's top management, a historic decision has been taken to reduce the total number of different car models manufactured by the group to half. Additionally, the company is also considering the serious option of completely closing down four of its major production plants within the country of Germany within the next eight years. Automotive industry experts believe that due to the changing global economy, rising costs and the costly transition towards electric vehicle (EV) technology, traditional auto giants are having to take such drastic measures to preserve their profits, which may also have a temporary or long-term impact on the production of luxury and sports car segments. Reasons behind the layoffs: Increasing global competition, new demands of the Chinese market and pressure of technological changes. In the official statement issued by Volkswagen Group, it has been clearly acknowledged that in view of the way global competition in the automotive industry is increasing day by day, customer demand patterns are changing and rapid technological changes are taking place in auto tech, it has now become extremely important to make the workforce and corporate structure exactly in line with the current economic reality. The company is completely re-engineering its business model so that it can face future challenges head-on. As per the group's upcoming plans, it aims to reduce its overall model portfolio by about 50 percent by the year 2035. The main focus of the company is now on a few selected priority models, the main objective of which is to perform better on the front of design, performance and modern technology. The company is working on a strategy to earn more profits by focusing on fewer variants and select vehicles. In addition, Volkswagen is striving to fully adapt to the rapidly changing growth expectations and priorities of the Chinese automotive market, and plans to aggressively expand the scope of its export business towards emerging markets in the Global South. Sale of non-strategic activities, review of real estate and Volkswagen's move towards a smaller and efficient structure As part of this comprehensive restructuring campaign, the Volkswagen Group is closely reviewing each of its business activities, large and small. The company has also announced that all the non-strategic activities going on in all its operating areas will either be sold in the market or they will be completely reorganized so that unnecessary expenses can be controlled. Additionally, the company's vast real estate portfolio is also being reviewed afresh to optimize financials on the asset front as well. The basic objective of this entire multi-layered process is to make the bulky and complex structure of the company smaller, agile and more efficient, so that the capital can be used in a more effective and profitable manner. Although this decision is extremely worrying and painful for the future of thousands of employees, the management believes that taking this bitter sip was inevitable in order to preserve the long-term survival and financial stability of the company in the changing global scenario.
