A few days ago, Volkswagen and workers’ representatives agreed on cost-cutting initiatives that could enable the company to increase its earnings by 10 billion euros by 2026. As part of the initiative, Volkswagen announced that the development cycle for new products will be reduced from 50 months to 36 months.

The Volkswagen brand has shortened its product development cycle from the current 50 months to three years. Volkswagen believes that three years of development time is enough to bring new cars to the market “without sacrificing quality and safety”. This measure alone will allow Volkswagen to save 1 billion euros by 2028. At the same time, Volkswagen plans to invest 800 million euros in building a new R&D center in Wolfsburg.

At the same time, Volkswagen will reduce the number of test vehicles used in the technology development process by 50 % in the 36-month development cycle, and complete more tests digitally, which will save Volkswagen 400 million euros a year.

The changes will also involve procurement, after-sales and production cycle optimisation, which will save around €770 million a year. In addition, some employees will be made redundant in a “socially acceptable way”, i.e. employees born in 1967 and some disabled employees born in 1968 will be retired. Volkswagen is also reported to have imposed a hiring freeze and is planning to reduce the cost of administrative staff by 20%.