On Monday, managers conveyed to the staff that Volkswagen's 10 billion euro ($10.9 billion) savings initiative will incorporate staff reductions. This announcement came alongside a caution from brand chief Thomas Schaefer, who highlighted that elevated costs and diminished productivity were rendering Volkswagen's cars noncompetitive.

The German automaker is currently engaged in negotiations with its works council regarding a cost-cutting scheme for its VW brand. This marks the initial phase of a broader, group-wide effort to enhance efficiency during the transition to electric cars.

"With many of our pre-existing structures, processes and high costs, we are no longer competitive as the Volkswagen brand," Schaefer conveyed during a staff meeting at the carmaker's Wolfsburg headquarters, reported Reuters.

The company had previously outlined its intention to leverage the "demographic curve" for workforce reduction, reaffirming its commitment not to implement dismissals until 2029. During Monday's meeting, Gunnar Kilian, a board member responsible for human resources, indicated that achieving this goal would involve agreements on partial or early retirement. 

Nevertheless, Kilian emphasised that the majority of the 10 billion euro savings target would be attained through measures beyond personnel reduction. He added that the comprehensive details of these measures would be finalised by the end of the year.

"We need to finally be brave and honest enough to throw things overboard that are being duplicated within the company or are simply ballast we don't need for good results," Kilian said.