Board approves Volkswagen's plan to halve model range, cut jobs and maybe close factories

The supervisory board of Volkswagen has approved a dramatic series of cuts at the automaker, which will see the model range cut by half, an extra 50,000 jobs removed and up to four factories closed in Germany.

At meeting held on Friday, European time, the supervisory board, which consists of management and workers' representatives, unanimously approved Future Plan 2030, which aims to more than triple the operating profit margin to nine percent and operating profit to €31 billion (A$50bn) by 2030.

While specifics are still sparse, the automaker confirmed key details about the plan, the main parts of which were leaked in reports over the past few months.

As part of the new plan Volkswagen Group will will cut its model range by 50 per cent and its "offering complexity" -- think drivetrains, trim levels, body styles and so forth -- by 75 per cent by 2035.

A report earlier this week indicated Seat, which has largely been starved of new product since Cupra was spun off as a standalone brand in 2018, will be a casualty of the model cull. 

Although it runs counter to the company's goal of improving economies of scale, the automaker will "tailor" platforms, electronic architectures and driver assistance technology for the Chinese market. 

Volkswagen's joint venture facilities in China will become an important source of vehicles for developing economies, while the company will refocus its US range on "the most profitable segments" without naming what they are.

In line with earlier reporting, the management team has determined its European factories have 500,000 cars per annum of unneeded production capacity, and four German plants (Emden, Zwickau, Hanover and Neckarsulm) are in the firing line as they have no "future production allocation" from the early 2030s onwards.

While their closure seems increasingly likely, the company has committed to coming up with a more detailed plan for its European factories by the end of June 2027, and this includes finding "alternative uses" for these four factories. Volkswagen is currently trying to conclude a deal with an Israeli weapons manufacturer to purchase and convert the Osnabrück plant into one that produces missile components.

Christiane Benner, deputy chair of the supervisory board and chairperson of the IG Metall, said the union "fought hard for good solutions", namely Volkswagen's commitment to  develop "future scenarios for all plants", as it tackles this "crisis situation".

On top of the 50,000 jobs it has been permitted to axe as part of an earlier restructuring, Volkswagen wants to cut a further 50,000 people from its payroll. Some of these positions will be come from its layers of management as the company seeks to flatten its leadership structure.

It is also hoping to speed up its decision making processes, with the supervisory board agreeing to relinquish some of its decision-making capability. 

Non-core businesses and shareholdings will be reduced by a third in order to free up cash and maintain the company's focus on car-making. Volkswagen will also review its property portfolio.

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