Volkswagen to sack 30,000 employees in wake of dieselgate

Volkswagen on Friday said it will cut 30,000 jobs at its own brand unit under a huge savings plan aimed at helping the German auto giant recover from the dieselgate emissions cheating scandal.

The deal, agreed with labour representatives after months of tortuous negotiations, will lead to annual savings of 3.7 billion euros (USD 3.9 billion) by 2020, VW brand chief Herbert Diess announced.

“Worldwide we will cut about 30,000 positions, including 23,000 positions in Germany,” he said, adding that these would be mostly through measure such as attrition and cutting temp jobs.

“I am very sorry for those affected, but the situation of the brand at the moment gives us little room for manoeuvre,” he told a press conference at the group’s Wolfsburg headquarters in northern Germany.

The so-called “Future Pact” agreed with labour leaders will also see VW create 9,000 new positions, as part of the group shift to electric vehicles in the wake of dieselgate.

VW was plunged into crisis last year after it admitted to installing software in some 11 million diesel vehicles worldwide that could detect when they were undergoing regulatory tests and lowered emissions accordingly to make the cars seem less polluting than they were.

The crisis hurt sales and damaged the image of the proud German company, pushing it to its first loss in over two decades last year.

In response to the controversy and to burnish its environmental credentials, VW has revved up its focus on clean energy cars, announcing plans to develop and manufacture more than 30 new electric vehicles by 2025.

VW, which employs some 600,000 people globally, has set aside some 18 billion euros to cover the fallout of the scandal, but experts believe the final bill for the buy-backs, fixes and legal costs will be far higher. 

Last month it agreed a USD 14.7 billion settlement with authorities in the United States that includes compensation for nearly half a million owners of the affected cars.