Volkswagen, in a move to bolster profitability and navigate a challenging shift towards electric vehicles, revealed plans on Dec 6 to downsize its workforce in the coming years.

Gunnar Kilian, the group's human resources chief, articulated the strategy saying, "Over the forthcoming years, we will need to responsibly decrease our workforce." He emphasised a focus on socially considerate measures like "partial retirement and early retirement schemes, wherever feasible."

Although the specific number of positions to be affected across the 10-brand group, which encompasses marques such as Audi, Skoda, and Seat, wasn't disclosed, Kilian outlined the target of cutting staff costs outside production by around 20 per cent.

He clarified that this reduction doesn't imply a 20 per cent slash in personnel but is primarily aimed at deriving savings through process enhancements and structural adjustments.

With a global workforce of approximately 675,800 employees, Volkswagen's announcement stems from a larger 10-billion-euro savings plan unveiled in June. This initiative aims to bolster profitability, which currently falls short of the long-term target of nine to 11 per cent profit margins.

The automotive giant's substantial investments in electric vehicles have encountered headwinds due to global economic challenges and tepid market demand. Moreover, stiff competition in critical markets like China poses a significant challenge.

To address rising costs compounded by factors like inflation and escalated energy prices post the Ukraine conflict, Volkswagen is implementing decisive measures. These include abandoning plans for a new research and development centre and expediting product development processes.

This recent announcement follows a previous decision in September to cut 269 temporary positions at its prominent electric car plant in Zwickau.