This archive report was first published on 8 June 2020.
Published on June 8, 2020, Volkswagen Group is taking drastic measures to deal with the financial impact of the COVID-19 pandemic. The company's CEO, Herbert Diess, revealed that Volkswagen is facing thinning liquidity due to low global demand for cars.
Global car sales have plummeted by 15% since the pandemic began, with more people working from home and avoiding public spaces. In the US, car sales halved year-on-year in April, while China recorded an 80% drop compared to February 2019.
The International Energy Agency reported a 60% drop in demand in Germany and a 90% decline in France. In response, Volkswagen is considering leaner R&D and fixed costs.
“We must significantly cut R&D expenditure, investments, and fixed costs compared with the previous planning,” said CEO Herbert Diess in a statement to Reuters.
However, the company has warned that the decision is not final, with a company spokesman stating, “There were general deliberations about what further cost measures could be taken to respond to the pandemic. There are no concrete decisions yet.”
As part of its cost-cutting measures, Volkswagen is also considering reducing its material costs by 20%, warning that some brands may not achieve a profit in 2020. This move follows Bentley, a Volkswagen Group luxury cars subsidiary, which announced plans to cut 100 jobs through a voluntary redundancy scheme.
