German carmaker Volkswagen has unveiled plans to cut 23,000 jobs in Germany to help achieve €3.7 billion in annual savings by 2020 to turn around its core brand and help fund a shift to electric and self-driving cars following its emissions scandal.
The agreement foresees a 25% improvement in productivity at German plants, the company said at a news conference today.
The so-called future pact, hammered out with labour unions since June, aims to increase the brand's operating margin to 4% by 2020, from an expected 2% this year, the company said.
Europe's largest carmaker is trying to increase savings at its biggest unit in Germany, where its costs are high, while needing to find billions of euro to pay for the clean-up related to its diesel emissions cheating scandal.
VW also said some 10,000 jobs would be axed outside of Germany, mainly in North and South America.
The group has 610,076 employees worldwide.
Labour leaders agreed to the cuts in exchange for a management pledge to create new jobs and invest in electric cars, mainly at factories in Germany.
At the same time as cutting traditional jobs, the VW brand will create 9,000 new jobs through investments in electric car technology, the source said.
VW managers have agreed to build an electric sports utility vehicle at the company's main plant in Wolfsburg and a smaller electric vehicle, known as the ID, in the eastern German city of Zwickau, the first source said.
Electric motors will be built in Kassel, and VW will start battery cell production in Salzgitter.
It will build full battery packs at its plant in Braunschweig, the first source said.
