VW could book up to USD 4.4 billion in provisions on capacity cuts: Jefferies

Volkswagen said earlier this month it was considering shutting plants in Germany for the first time in its history, part of a cost-cutting plan as it struggles to compete with Asian rivals.

Autocar Professional BureauBy Autocar Professional Bureau calendar 16 Sep 2024 Views icon1411 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
VW could book up to USD 4.4 billion in provisions on capacity cuts: Jefferies

Volkswagen could book up to up 4 billion euros in provisions for planned capacity no later than the fourth quarter, analysts at Jefferies said in a note, after travelling with company executives in North America, the newswire noted. 

Volkswagen said earlier this month it was considering shutting plants in Germany for the first time in its history, part of a cost-cutting plan as it struggles to compete with Asian rivals.

Volkswagen had said this month that it was mulling closing plants in Germany, marking the first in its history. This is a part of the company's cost-cutting plan as it grapples to stay afloat in competing with Asian rivals. 

"The rationale to re-size VW's namesake (brand) is not new but management's sense of urgency and determination to tackle excess capacity and spending patterns both are," Jefferies analysts wrote in the note.

"Three days on the road in North America with management gave us conviction that there is no plan B that would rule out capacity reduction," they noted, adding decisions could lead to provisions of 3 to 4 billion euros in the fourth quarter, Reuters stated. 

The broking firm did not specify the intent of the trip, Reuters noted. VW refrained from offering a comment.

Furthering its restructuring efforts, Volkswagen last week stopped a long-standing job security scheme for six of its German plants, with unions pledging strong resistance to any kind of cuts, the newswire noted. 

Jefferies said charges could be around 2.5 billion to 3.0 billion euros and up to 4 billion assuming separation costs of two annual salaries per worker and "including other closure costs" it did not specify, the newswire noted. 

 

RELATED ARTICLES
Exclusive: BorgWarner Expands Electric Drive Motor Portfolio with Advanced Technology Solutions

auther Shruti Shiraguppi calendar30 Apr 2025

Hairpin and S-winding technologies aim to contribute to efficiency and power density improvements in electric and hybrid...

Uno Minda Board Approves ₹423 Crore Investment for EV Powertrain Project

auther Shruti Shiraguppi calendar30 Apr 2025

Joint venture with Inovance Automotive to develop and manufacture high-voltage components for electric vehicles with pro...

Indofast Energy and EVeez to Deploy 20,000 E-Bikes Across India

auther Shruti Shiraguppi calendar30 Apr 2025

Companies expand battery-swapping infrastructure across multiple cities to reduce operational costs and enhance efficien...