BERLIN [Agency Report]: Volkswagen is estimating that its sweeping restructuring programme could cost about €16 billion, including expenses linked to workforce reductions and the possible closure or phase-out of production at several German plants, according to a person familiar with the matter.
The automaker, Europe’s largest, is undertaking its most extensive restructuring to date as it confronts intensifying competition from Chinese manufacturers, higher tariffs and excess production capacity.
Under the restructuring agreement reached last week, Volkswagen plans to examine alternatives for four German factories that are expected to run out of vehicle models over the coming decade. The agreement also calls for roughly 50,000 additional positions to be eliminated beyond reductions previously planned.
The company declined to comment on the estimated overall cost. The €16 billion figure was also reported by German magazine Der Spiegel.
The projected costs vary significantly among the affected plants. Phasing out vehicle production at Volkswagen’s facilities in Emden and Zwickau is expected to cost approximately €1 billion for each site, while the estimated cost is around €2 billion each for the Neckarsulm and Hanover plants.
A further €10 billion is expected to cover expenses associated with reducing the company’s global workforce by as many as 60,000 jobs.
The restructuring comes as Volkswagen seeks to reduce costs and address the pressures facing its business in a rapidly changing global automotive market.
