Volkswagen Aims to Cut Indirect Labor Costs by 20% Over Next Three Years

Volkswagen targets a 20% reduction in indirect labor costs by 2027 through its “KI 10” efficiency program, without layoffs.

Volkswagen aims to reduce personnel costs by 20% over the next three years, focusing on indirect labor costs rather than layoffs, according to a recent official statement.

As reported by the China Business Journal, Volkswagen’s China division clarified that the “KI 10” Efficiency Program targets a 20% efficiency improvement by 2026, referencing 2023 as the baseline. This plan includes all Volkswagen China operations.

Previously, an internal Volkswagen document revealed that to improve efficiency and optimize costs, the company established the “KI 10” performance project. This project aims for a 20% cost reduction, including fixed and personnel costs, over the next three years.

The document highlighted the intense market conditions in China, which have added financial pressure on Volkswagen’s performance. “To stay competitive, we must invest in the future now.

The profitability of our China operations is crucial for these investments. Since last year, our team in China has been working to implement this performance plan locally.”

Addressing the leaked document’s contents, Volkswagen stated that the “20% efficiency improvement” plan is part of its strategy to accelerate electrification, strengthen competitiveness, and reduce costs.

The company emphasized the importance of not spreading misunderstandings.

In the first quarter of 2024, Volkswagen China saw an 8% increase in deliveries, reaching 693,600 vehicles, with electric vehicle deliveries up 91% to 41,000 units.

Over the next three years, Volkswagen plans to introduce more than 40 new models to the Chinese market, with half being new energy vehicles.

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Volkswagen Aims to Cut Indirect Labor Costs by 20% Over Next Three Years

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