VW May Axe 30,000 Jobs

Volkswagen, Europe's largest carmaker, could axe up to 30,000 jobs or almost a third of its German workforce in a drive to cut costs and boost profits launched yesterday by Wolfgang Bernhard, the new head of its loss-making VW brand. The news came as rival carmaker Ford received a boost with the $15bn (£8bn) sale of its Hertz car rental business.

The potential job losses at Volkswagen are three times higher than initial estimates set out by Mr Bernhard and chief executive Bernd Pischetsrieder and would result from the wholesale outsourcing of component-making from VW plants, such as Kassel and Hanover.

Launching a new fuel-efficient convertible coupé, the Eos, at the international motor show, Mr Bernhard said the figures had been "plucked out of the air". But insiders said they were mentioned seriously in internal planning documents. VW, traditionally a pioneer in cost-cuts without large-scale redundancies, has told its 103,000-strong German workforce it wants to reduce personnel costs by 30% by 2008.

Last year it signed an agreement with unions that, in return for a temporary wage freeze, there would be no compulsory lay-offs until 2011. But it is now seeking thousands of job cuts through early retirement, part-time working and voluntary severance to save about €1bn (£673m). Mr Pischetsrieder has indicated the agreement could be renegotiated.

Western carmakers are suffering from competition from lower cost countries and the increasing price of raw materials. Last night America's Ford, which has cut tens of thousands of jobs over the past few years and announced the loss of a further 1,000 management positions in June, said it had sold Hertz for $15bn including debt.

The buyers are a private equity consortium which includes Carlyle Group and Merrill Lynch Global Private Equity.

The sale of Hertz will provide a boost to Ford, giving it some much-needed financial flexibility. Its debt has been downgraded to junk status by credit ratings agency Standard and Poor's. It said in June that US sales had fallen 5% in 2005 and profits in the first quarter of this year fell nearly 40% to $1.2bn.