Volkswagen AG is making big moves in digitalization with plans for a 4 billion euro investment, cutting up to 4,000 non-production jobs, and creating 2,000 digitalization related jobs.
Up to 4 billion euro are earmarked for VAG’s digitalization strategy, spread over the time period until 2023. The company said that it would reduce non-production jobs, with redundancies reportedly impacting employees in Germany. However, no job cuts are expected to take place until 2029.
Future products from Volswagen Group will require modern, seamless, and effective sales and aftersales support. This is what the company is trying to achieve through its digitalisation push.
A statement released by the company states: “Agile working methods, improved processes, and digitalisation are to reduce the burden on employees and speed up processes. Tasks that used to be performed manually are to be simplified through improved IT.”
Raif Brandstatter, Volkswagen brand’s Chief Operating Officer, commented on the decision, “Our digital transformation roadmap adds further momentum to the modernisation of Volkswagen. We are laying a sustainable foundation for making the company fit for the digital era. We are accumulating new digital expertise, and making all areas of our organisation faster, leaner, and more competitive.
With modern automobiles fast turning into computers that you can drive, VAG’s decision to streamline and digitalise its operations is not unfounded. The cost reductions accompanying the forthcoming job cuts will help the company to finance the transformation from its own resources. At the same time, it is not necessarily a cruel decision to lay off 4,000 jobs, as the digital transformation will unlock almost as much, if not more, positions required to sustain operations.
On the sidelines, Volkswagen Group has urged leading firms around the world to pool resources and knowledge to develop autonomous vehicle programs. It is also designing its own operating system for future EVs and driverless cars. On a smaller scale, VAG has tied up with leading supermarket chains and similar businesses to provide them with autonomous drones and vehicles to take care of supply and logistics.
Doing away with the bureaucratic tangle will enable VAG to invest more in product development, at the smae time creating newer jobs.
For so many ambitious, future-forward projects to be successful, it is important to modernise the firm’s own internal processes and operations. Which is exactly why the move towards digitalisation makes perfect sense. Volkswagen wants to save around $600 million per year by eliminating bureaucracy and increasing the number of workers reporting to each manager.
Brandstatter continued, “The brand has set its sights on achieving an operating return on sales of six percent by 2022. That is three years earlier than originally planned. At the same time, we are creating new, modern digital and agile jobs and improving our productivity.”