The management of the ailing VW software subsidiary Cariad and the works council have agreed on key points for a savings program. As the company announced on Thursday evening, Cariad wants to reduce its internal development costs by 20 percent in order to Volkswagen’s billion-dollar cost-cutting efforts to support.
The company left it open what exactly this means for the 6,500 employees. The board of directors and works council agreed to forego redundancies for operational reasons and instead offer a voluntary severance program. “In return, the existing job security was extended until 2029,” the statement continues. The efficiency program will start in 2024 and will be associated with a comprehensive structural restructuring.
Cariad boss Peter Bosch (49) had in October Volkswagen-The Group Board presented its restructuring concept. This saw according to information from manager magazine
proposes that 2,000 of the 6,500 German jobs be cut. Bosch also wanted to give up half of the investments it had accumulated under its predecessors. Bosch’s plan also called for significantly reducing spending on software service providers and ultimately also the Cariad budget from around four billion euros annually. Cariad burned around 2.5 billion euros in cash in the first nine months of this year alone.
However, the company remained tight-lipped on Thursday about the savings targets that were leaked at the time. What should now contribute to the cost savings: Cariad will significantly reduce the proportion of “expensive order developments from suppliers”. In the future, the software subsidiary will focus more on “standard purchase solutions” and “real development partnerships” such as with the Bosch Group and on more in-house developments.
“We are making good progress in the transformation of Cariad – the key issues paper negotiated with the employees is an important step,” CEO Bosch was quoted as saying in the statement. Cariad is becoming more efficient, converting many processes and optimizing its products. The aim is to provide the Volkswagen Group brands with competitive software for their customers.
In fact, the Volkswagen Group has launched electric models like this in the past Audi Q6 e-tron and the Porsche Macan have to be postponed several times due to unreliable software. It is currently said that the models should go on sale in spring 2024.
However, more than the two models mentioned depend on the E3 1.2 electronics architecture in question. Without the functioning Cariad software, which is to be used in both combustion and electric vehicles, a good 60 new car models cannot be built. The management now explained: “For the E3 1.1 and E3 1.2 architectures, Cariad is introducing a new control model in order to increase delivery capability.”
Works council boss Stefan Henze massively criticized the Cariad leadership’s plans at the end of October. Now he was optimistic about the agreement reached: the key issues paper is the foundation for the future of Cariad. “We are becoming more efficient, but remain a reliable company that gives its employees a perspective.”