FRANKFURT (Reuters) – Volkswagen and unions have struck a deal on the carmaker’s German sites and jobs, averting the spectre of strikes at Europe’s largest carmaker.
Under the agreement, Volkswagen will reduce its German workforce by over 35,000 jobs, or a quarter of its division’s workforce, by 2030 in a socially responsible way. This will be achieved through a new job protection scheme that runs until 2030.
The company will also reduce capacity at its German plants by 734,000 units, which is roughly a quarter of its entire German capacity. This is in response to a predicted shortfall in demand of about 500,000 cars, equivalent to about two plants.
The measures are expected to bring down costs by 15 billion euros ($15.7 billion) a year over the medium term, with labour cost cuts and capacity cuts contributing around 4 billion annually.
Notably, none of VW’s plants will be shut down, but the future of its Osnabrueck factory beyond mid-2027 is uncertain, with the company exploring alternative scenarios for the site’s use, including finding an investor.
The Dresden plant will stop vehicle production at the end of 2025, with VW examining options for the site, including participating in a third-party concept. The Wolfsburg plant, VW’s biggest, will reduce production to two assembly lines from four currently, with production of the Golf and the Golf Variant being shifted to VW’s plant in Puebla, Mexico, from 2027.
Under the collective wage agreement, VW’s staff will not receive any raises over the next four years, while some bonuses will be scrapped or reduced.