VW software subsidiary Cariad is planning massive job cuts

The VW software subsidiary Cariad is facing major job cuts. Specifically, there are around 1,000 jobs that are to be eliminated. The German Press Agency learned this from corporate circles. This would affect almost a quarter of the approximately 4,300 remaining Cariad employees. The “Handelsblatt” had previously reported.

By when and how the jobs would be eliminated was still unclear. Negotiations will now be held with employee representatives. A Cariad spokesman declined to comment.

Upon request, the works council confirmed that the board had announced the job cuts to the workforce on Wednesday. At the same time, the company terminated the central collective agreements with IG Metall. «Sales and job cuts are not a future concept. Anyone who wants to achieve competitiveness through cuts alone is taking the wrong path,” said works council leader Gerhard Retzer.

As the “Handelsblatt” reported with reference to participants, the reduction is necessary in order to maintain competitiveness compared to external software providers. Accordingly, the company should reduce its investments by around 6.1 billion euros from 2027 to 2031. At the beginning of the next decade, Cariad is also expected to contribute a further 400 million euros to the planned improvement in the Group's operating results. The board's future plan, which is intended to make the group more profitable by 2030, calls for billions in cuts in development budgets and the elimination of tens of thousands of jobs.

Cariad's software solutions are used throughout the VW Group. The subsidiary was originally supposed to develop large parts of the software itself. Due to problems with important projects, which also delayed the launch of individual models, the car company replaced the Cariad leadership in 2023 and changed course.

Unlike his predecessor Herbert Diess, VW CEO Oliver Blume relies on cooperation with external partners such as Xpeng in China or Rivian in the USA when it comes to software. Cariad is now focusing, among other things, on the in-house development of key technologies - such as driving dynamics software, cloud applications and infotainment systems.

The software subsidiary has already cut jobs several times in previous years. At the end of 2023, Cariad still had 6,500 employees. Finally, the reduction should be carried out in a socially acceptable manner through severance payments and early retirement programs. “The job security applies until the end of 2029 and we will resolutely ward off any attack on jobs and collective bargaining rights,” said Retzer. Cariad needs innovations, strong products and investments in future technologies instead of the same austerity programs.

“Now the board has to show a viable strategy for the future,” explained Retzer. “We expect answers to the company’s central challenges and long-term perspectives, not the next attack on the workforce.” Be prepared for a tough confrontation.