Following intense discussions between Volkswagen AG, IG Metall (the German trade union) and the Works Council, the company has announced a joint agreement called 'Zukunft Volkswagen' (Future Volkswagen).
In a statement, VW said it was realigning production capabilities at Volkswagen AG locations in Germany and creating the conditions for a reduction in labor costs of €1.5 billion per year at the level agreed jointly with an agreement on the wage settlement of the company until 2030.
The short-term reduction in labor costs and the agreed structural measures through capacity reduction and a reduction in development costs will lead to cost savings of over €4 billion per year in the medium term, VW said.
In addition, it is planned to reduce capacity by 734,000 units across the German plants. This, the company says, 'will enable Volkswagen AG to lay the foundation for important investments in future products up to 2030'. VW also said that the company's structural realignment at an operational and collective level would create the conditions for 'achieving the return-on-sales target for the Volkswagen Passenger Cars brand in the medium term'.
There was also an agreement on what was called a 'socially responsible reduction in the workforce of more than 35,000 across Volkswagen locations in Germany by 2030'. This includes a newly drawn up job security plan up to 2030.
VW said the deal will deliver sustainable cost savings to Volkswagen AG of more than €15 billion a year in the medium term. Of this, over €4 billion a year comes from the current negotiations on labor costs, structural and production measures and the use of machinery.
Labor costs alone will be reduced by €1.5 billion per year.
VW said a full and final assessment of the impact of these cost impacts on Visit Wales Group's operating profit in 2025 and subsequent years will be made 'in the coming weeks'. Currently, the company does not expect any significant impact on the outlook for the 2024 financial year.
The jointly declared 'Zukunft Volkswagen' aims for the Volkswagen Passenger Cars brand, the core of Volkswagen AG, to become a technologically leading volume manufacturer globally by 2030.
VW said there is also job security for Volkswagen AG's workforce at the mutually agreed level until the end of 2030, as agreed during the collective bargaining negotiations. 'Zukunft Volkswagen' also now 'secures commercially sustainable production at German sites'. To this end, the company and the Works Council have agreed on a socially responsible reduction in the workforce of more than 35,000 across Volkswagen sites in Germany by 2030, alongside the structural production measures.
Oliver Blume, CEO of the Volkswagen Group, said: “Following the long and intensive negotiations, the agreement is an important sign for the future viability of the Volkswagen brand, Volkswagen Commercial Vehicles and the component plants. With the package of measures agreed, the company has set a concrete path for its future in terms of costs, capabilities and structures. We are now back in a position to successfully shape our own destiny. The Management Board and the wider management team make a more than proportionate financial contribution.”
Gunnar Kilian, Chief Human Resources Officer of the Volkswagen Group and Labor Director of Volkswagen AG, said: “Zukunft Volkswagen' marks the fundamental realignment of Volkswagen AG. The stated aim of all the negotiating partners was not to find a short-term compromise, but to develop a basic agreement that has a sustainable financial impact and that creates prospects for our plants and our workforces. After very intensive discussions, we have now succeeded in doing this together with the Works Council. I would like to thank everyone who took part, especially our main negotiator Arne Meiswinkel and his team, who have shown excellent commitment. The outcome of the negotiations will enable us to position our company for the future, maintain production in Germany and make it competitive, in order to lead Volkswagen back to the top.”
Thomas Schäfer, CEO of the Volkswagen Passenger Cars brand, said: “'We have set ourselves three priorities for the future of the Volkswagen brand: Reducing overcapacity in Germany, reducing labor costs and achieving competitive development costs. The discussions have led to viable results in all three areas. With the package of measures agreed, we are in a position to close the gap in our performance program to a large extent. We have therefore created the basis for making Volkswagen the technologically leading volume manufacturer by 2030 – with a clear plan, strong products and a clear commitment to Germany as a business location.”
Some details
The agreed plant deployment provides for the following realignments for Volkswagen Passenger Cars brand plants:
Wolfsburg (Production): In the future, ID.3 and CUPRA Born models will also be produced at the headquarters. Production of Golf and Golf Estate models will be relocated to Puebla in Mexico from 2027. As a result, production will focus on two assembly lines instead of today's four. The future of the plant will also be secured at the end of the decade with the introduction of the electric Golf and another model based on the SSP electric car architecture in the future.
Wolfsburg (Technical Development): In order to be able to invest more in innovation, Technical Development is being reorganized to make it more effective. By using Group synergies, the competitiveness of Technical Development will be sustainably strengthened. As part of this realignment, around 4,000 jobs will be cut by 2030. Tasks will also be transferred to other locations within the Technical Development network. In the future, the Technical Development department of the Volkswagen Passenger Cars brand will be responsible for the development network of the core brand group.
Emden: The Emden plant will continue to produce the ID.7 saloon, ID.7 Tourer and the ID.4, even after the facelift.
Osnabrück: The T-Roc Cabrio will be produced in Osnabrück until mid-2027. Options for a different use of the site are currently being explored.
Zwickau: Zwickau will remain the production location for the Audi Q4 e-tron and Audi Q4 e-tron Sportback. As a result, vehicle production will focus on one line from 2027.
In addition, there are new business areas to be developed in the context of the circular economy.
Dresden: Vehicle production at the 'Transparent Factory' in Dresden will end at the end of 2025. Volkswagen AG is working on alternative options. These include the possibility that Volkswagen AG could participate in a third party scheme.
Volkswagen Commercial Vehicles: The main Volkswagen Commercial Vehicles plant in Hanover will continue to be the production site for the ID.Buzz and the Multivan. Concrete measures were agreed to sustainably reduce factory costs. This will enable Volkswagen Commercial Vehicles to create a basis for investing in future products using its own resources.
Volkswagen Group Components: To ensure the competitiveness of Volkswagen Group Components, a sustainable efficiency increase of up to €3 billion is targeted cumulatively by 2030. The focus is on increasing economies of scale by systematically focusing the product portfolio on strategic core components. On this basis, labor costs will be reduced by around €500 million per year. The Volkswagen Group Components sites in Kassel, Braunschweig, Salzgitter, Hannover, Wolfsburg and Chemnitz will be retained and factory costs will be continuously reviewed. New working time models will be introduced to make production capabilities more flexible.
“Volkswagen and IG Metall strike agreement on German cost cuts” was originally created and published by Only Autobrand owned by GlobalData.
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