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Volkswagen Boss: VW Needs to Earn “Significantly More Money” With its Cars

VW Group CEO talks future of the company amid recent turmoil

VW Group CEO talks future of the company amid recent turmoil

The Volkswagen brand is cutting 7,000 jobs as it prepares to roll out new electric cars, which are less complex to build and don’t require as many workers. Now a week later, Volkswagen Group boss Herbert Diess is pushing for the company to be more efficient so it can achieve its goals.

“We must earn significantly more money with our cars so that we can invest in the future,” Diess said in a meeting in Wolfsburg, Germany. “We must become leaner, more flexible, faster, so that we can keep up with the new competitors. We must leverage the potential of this great Group and this great factory in Wolfsburg.”

Volkswagen’s namesake brand has struggled in terms of profitability. Last year, the operating margin for the brand dropped to 3.8 percent. For 2022, VW is estimating a 6 percent margin. The brand is funneling resources into a host of EVs under the ID label, including a hatchback, crossover, sedan, and a reinterpretation of the Microbus. The Group aims to build 22 million electric vehicles in the next 10 years.

It takes 30 percent less time to assemble electric cars, VW says. Plans for early retirement of some staff will help reduce the workforce by 5,000 to 7,000.

Diess’ laser focus on profits has put him in the spotlight recently. The CEO has been under scrutiny for invoking Nazi-era rhetoric in a management meeting. He reportedly told his managers, “Ebit macht frei,” or “Profits will set you free,” talking about Porsche’s strong profit margins. This sounds similar to “Arbeit Macht Frei,” or “Work will set you free,” a phrase seen on the entrance of Auschwitz and other Nazi concentration camps. “At no time was it my intention for this statement to be placed in a false context,” Diess said in an apology on his LinkedIn page, reports Forbes. “At the time I simply did not think of this possibility.”

Source: Volkswagen, Reuters, Forbes (1,2)