The German carmaker plans to cut thousands of jobs in South America as a part of a restructuring plan. Volkswagen has a long and controversial history in Brazil in particular, where it produced the Beetle for decades.
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German automaker Volkswagen intends to cut 7,000 jobs in South America within the next five years, announced its Brazilian subsidiary, Volkswagen do Brasil, on Friday.
Five thousand jobs are expected to be cut in Brazil and an additional 2,000 in Argentina, where VW is struggling to sell. Volkswagen has deep ties to the region since opening its first plant in Brazil in 1957. That plant produced 3 million units of the famous Beetle, known as the Fusca in Brazil. Another model, the Gol, became the most-sold car model in Brazil. VW had a controversial relationship with the Brazilian government during the military dictatorship between 1964 and 1985 and hired an external historian to look into the actions committed by the carmaker under the regime.
"I am very sorry for those affected, but the situation of the brand at the moment gives us little room to maneuver," said Volkswagen brand chief Herbert Diess at Volkswagen headquarters in Wolfsburg on Friday.
Volkswagen slashes 30,000 jobs
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The deal took months of negotiations with workers' representatives and will lead to annual savings of 3.7 billion euros ($3.9 billion) by 2020. This will allow the automaker group to invest in electric vehicles. VW pledges to create 9,000 new jobs in battery production and mobility services. "We have to invest billions of euros in new cars and services while new rivals will attack us," said Diess.
About 23,000 of the job cuts will take place in Germany and occur mostly through attrition and temporary job losses. But the cuts may not be enough to stay among the top car makers. "The cuts are too small to make VW cost competitive with Toyota and other global rivals," said University of Michigan professor Erik Gordon.
kbd/ (AFP, dpa, Reuters)
10 things you (probably) didn't know about Volkswagen
'Diesel-gate' has everyone talking about the German carmaker. But what do you really know about the company that brought you Das Auto?
Image: picture-alliance/dpa/I. Wagner
The people's car
Did you know that Volkswagen - or the 'people's car' - was Adolf Hitler's brainchild, and that it was developed by Porsche founder Ferdinand Porsche? In 1938, Hitler even had built an entire city just to house the factory and its workers. First known as "City of the [Kraft durch Freude] Car at Fallersleben," it was renamed Wolfsburg on May 25, 1945. To this day, the city remains home to VW.
Image: DW/J. Dumalaon
The world's #1 love-bug
From Hitler's wet dream on wheels to the world's favorite love-bug: The original Beetle - known in Germany as 'Der Käfer' - ruled the list of the world's best-selling car for much of the 20th century. By the time production was discontinued in 2003, more than 21.5 million Beetles had been sold worldwide.
Image: DW/E. Schuhmann
Volkswagen's many faces
The company has come a long way since the 1930s. The Volkswagen Group's garage currently fits 12 brands under its roof. Audi, Bentley, Lamborghini, Porsche and Skoda are among its best-selling subsidiaries, accounting for 37 percent of 2014 sales.
Image: Audi AG
Market domination
Today, Volkswagen really has become the "People's Car": The Group accounts for more than every third car - 36 percent, to be exact - sold in Germany.
Image: picture-alliance/dpa
1 out of 10 cars worldwide
Globally, more than 1 out of every 10 cars sold in 2014 was a Volkswagen Group brand. The company sold more than 10.2 million vehicles in that year. 7 out of 10 were sold outside Germany.
Image: picture-alliance/dpa/Z. Junxiang
US market an uphill battle
The coveted US market has proven to be a real thorn in the eye for the German carmaker. Just 6 percent of its cars - or some 600,000 - were sold abroad. Despite huge investments, its market share there has been stuck at about 2 percent, trailing far behind competitors like GM, Ford and Toyota.
Image: picture-alliance/dpa
Pole position at stake?
In July, 2015 Volkswagen overtook Toyota as the world's top-selling carmaker. It's also the world's biggest automotive company by revenue. In 2014, it reported sales of 202.5 billion euros. Profit after tax came in at 11.1 billion euros. But after the emissions scandal, analysts warn VW's pole position could be at risk.
Image: picture-alliance/dpa
Global employer
As of December 31, 2014, the Group employed nearly 600,000 workers, making it one of the biggest employers worldwide. More than a third - some 270,000 - worked at one of its German locations.
Image: picture alliance/dpa
Germany's biggest industry
The auto industry is the largest sector in the Germany economy, fuelled by the so-called 'Big Three' - Daimler, BMW and VW. Combined, the industry employs nearly 800,000 people - or almost 2 percent of the German workforce.
Image: picture-alliance/dpa/B. Weißbrod
German cars drive exports
The German car industry's total revenue nearly topped 370 billion euros in 2014. It made up about one-fifth of the country's exports, and contributed around 3 percent to German GDP.