Volkswagen does not want to hire any new employees at its most important locations for the time being. The hiring freeze is part of a program intended to make the car manufacturer’s core brand more profitable again.
In the struggle to save billions, Volkswagen has imposed a temporary hiring freeze for its most important locations. “Due to the ongoing efficiency programs at Volkswagen AG, external hiring will be temporarily limited and no external positions will be advertised,” said a spokesman. All six locations in Lower Saxony and Hesse are affected: Wolfsburg, Hanover, Braunschweig, Salzgitter, Emden and Kassel. “Business Insider” had previously reported.
Return on sales in the core market shrank to 3.4 percent
The background to the measure is the planned efficiency program, which the Volkswagen core brand has been negotiating with the works council since the beginning of October. It is considered a case of restructuring and has to contend with many problems. Europe’s largest car manufacturer justified the weaker performance, among other things, with high costs and a shift towards cheaper cars. In addition, a production loss by a supplier due to the floods in Slovenia had a negative impact on the third quarter.
In the first nine months of 2023, the core brand’s operating return on sales fell to 3.4 percent. This means that out of every 100 euros in sales, only around 3.40 euros in operating profit remained in day-to-day business. A year earlier, the operating margin was 4.7 percent. The “Performance Program” announced in the summer is intended to reduce the costs of the core brand by ten billion euros by 2026 and increase the return on investment to 6.5 percent.
Hiring freeze for works council “understandable”
The VW works council showed understanding for the hiring freeze that has now been imposed. “In view of the recent efficiency efforts, it is understandable that the company is now reducing further job creation through new hires to the bare minimum,” said a spokesman. “We see this as an opportunity to advance the key issue of internal transformation in an even more concentrated manner than before.”
The company spokesman emphasized that ongoing recruitment processes are not affected by the hiring freeze. There are also exceptions for absolutely necessary tasks, such as fulfilling legal obligations. Just in October, VW rejected a report that up to 4,000 administrative jobs would be eliminated as part of the efficiency program.