One day after posting a significant drop in Q1 profits, Volkswagen Group is looking to trim down its administrative staff in Germany to bolster 2024 returns. Volkswagen said it is offering close to one billion dollars in bonuses for employees who opt to end their contracts early.
We were prepared for Volkswagen Group’s less-than-stellar Q1 2024 numbers yesterday, as the German automaker warned the public it would be down overall after sharing its delivery tallies in early April.
Deliveries for Q1 were, in fact, up 3% year-over-year, but BEV sales fell. EV sales were only in the green in China (+91% YOY) and stumbled in Europe (-24%) and the US (-16%). The auto conglomerate reported EUR 75.5 billion in sales revenue, down from 76.2 billion in Q1 2023, and EUR 4.6 billion in operating results, down 20% compared to a year ago, with an operating margin of 6.1%.
In the report, Volkswagen cited “lower sales volumes, an unfavorable country, brand and model mix as well as an increase in fixed costs” as the reasoning behind its negative Q1 2024 results. Following the financials being published, Volkswagen Group’s chief financial officer, Arno Antlitz, explained the company’s need to lean down and that it intends to do so by offering bonuses to any employee willing to walk away early.
Volkswagen offering bonuses to end employee contracts
According to a report from Automotive News Europe, Volkswagen Group intends to offer bonuses to a number of administrative employees who terminate their employment contracts early.
The German automaker has allocated €900 million ($961 million) toward the employee buyouts, which will occur this quarter. The report states that seasoned administrative employees based in Germany can opt-in for a €50,000 ($53,400) bonus on top of their severance package, which is individually based on an employee’s pay grade and tenure at Volkswagen Group.
Volkswagen Group CFO Arno Antlitz spoke to the bonuses during the automaker’s Q1 2024 call with investors on Tuesday, relaying that the company intends to “compensate for those effects in the full year.”
Administrative employees at Volkswagen Group who qualify for the early exit bonuses have until the end of May to take the money and pack up their belongings. VW Group’s human resources chief Gunnar Kilian already prefaced the staff trimming by saying late last year that the automaker would need to reduce its personnel costs by 20% to reach its annual financial goals for 2024.
The leaned-down staff is also part of the Group’s business strategy to bolster its namesake car brand and stay competitive with rivals like Stellantis and Chinese automakers that continue to expand their market footprint in the EU. Those companies include XPeng, NIO, BYD, and Zeekr, to name a few.
FTC: We use income earning auto affiliate links. More.
