Volkswagen’s board has agreed to the company cutting 23,000 jobs in Germany by 2020, as the company attempts to improve its competitiveness, and shift its brand from that of a carmaker to a ‘mobility service provider’.

The company did not mention the costs associated with the diesel emissions testing scandal as a reason, though this has impacted the company’s balance sheet significantly since the news originally broke.

Of the 23,000 jobs going in Germany, none will be from compulsory redundancy. Instead they will come from what VW termed ‘natural fluctuation and partial early retirement, taking the demographic curve into account’.

It also said the company expected the move to create €3.7bn savings per year by 2020, and that the majority of this will be invested into German facilities, in ‘future oriented areas’, resulting in the creation of 9,000 jobs.

This includes a plant to enter the field of developing and producing electric vehicles and components, such as a pilot plan for battery cells and cell modules.

Herbert Diess, chairman of the brand board of management, said: “We will be strengthening the company’s economic viability and competitiveness and will be safeguarding the future of our plants. The socially compatible loss of jobs will be offset by the creation of jobs in other units.”

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Karlheinz Blessing, member of the board of management responsible for HR, said: “The implementation of the pact for the future will bring major changes for many of our employees. They will need to obtain additional qualifications, learn new ways of working and assume new responsibilities. But the effort will be worthwhile: we will make Volkswagen slimmer, faster and stronger, safeguarding employment in Germany in the long term.”

Motor Finance has contacted VW for comment at the time of writing and will update the story should any comment be received.