Volkswagen is looking to cut costs to deal with the financial impact of the COVID19 pandemic. Volkswagen Group CEO on Thursday said that the company is facing thinning liquidity due to low global demand for cars.
Global car sales have dropped by 15% since the pandemic began. More people are working from home and avoiding public spaces hence the low demand for cars. In the US, car sales halved year-on-year in April, whereas China recorded an 80% drop compared to 2019 February.
Similarly, the International Energy Agency recorded a 60% drop in demand in Germany and a 90% decline in France. Therefore the company is, considering leaner R&D and fixed costs.
“We must significantly cut R&D expenditure, investments and fixed costs compared with the previous planning,” Reuters quoted CEO Herbert Diess.
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However, the company has warned that the decision is not final.
“There were general deliberations about what further cost measures could be taken to respond to the pandemic,” the company spokesman told Reuters. “There are no concrete decisions yet.”
The company is also considering cutting down its material costs by 20%, warning that some brands will not achieve a profit in 2020. Earlier, Bentley, a Volkswagen Group luxury cars subsidiary announced plans to cut 100 jobs through a voluntary redundancy scheme. The German automaker owns multiple car brands globally, including Lamborghini, Audi, Skoda, Porsche, Bentley, and Bugatti.
