The company announced that after extensive negotiations between Volkswagen AG, IG Metall (German trade union) and the works council, a joint agreement entitled “Zukunft Volkswagen” (Volkswagen’s Future) has been concluded.
Volkswagen said in a statement that it is reorganizing production capacities at Volkswagen AG’s German sites and creating conditions to reduce labor costs by 1.5 billion euros annually at the collectively agreed level with an agreement on the company’s wage settlement until 2030.
Volkswagen said the short-term reduction in labor costs and structural measures agreed through capacity cuts and lower development costs would result in cost savings of more than 4 billion euros per year in the medium term.
In addition, capacity is scheduled to be reduced by 734,000 units across German factories. This “will enable Volkswagen AG to lay the foundation for important investments in future products until 2030,” the company said. Volkswagen also said that the structural reorganization of the company at the operational and group level will create the necessary conditions “to achieve the return on sales target of the Volkswagen passenger car brand in the medium term.”
There was also agreement on a so-called “socially responsible reduction of the workforce by more than 35,000 across German Volkswagen sites by 2030.” This includes the newly formulated job security plan until 2030.
Volkswagen said the agreement would bring sustainable cost savings to Volkswagen AG of more than 15 billion euros annually in the medium term. Of this amount, more than €4 billion per year will be derived from current negotiations on labor costs, structural measures, productivity and the use of factories.
Labor costs alone will be reduced by 1.5 billion euros annually.
A full and final assessment of the impact of these cost impacts on the Volkswagen Group’s operating profits in 2025 and subsequent years will be made “in the coming weeks,” Volkswagen said. Currently, the company does not expect any significant impact on its fiscal year 2024 outlook.
The jointly declared goal of “Zukunft Volkswagen” is for the Volkswagen Passenger Cars brand, the core of Volkswagen AG, to become the technologically leading manufacturer of the world by 2030.
There is also job security for Volkswagen AG’s workforce at the collectively agreed level until the end of 2030, as agreed during collective bargaining negotiations, Volkswagen said. Zukunft Volkswagen now also guarantees “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 individuals across Volkswagen’s German sites by 2030, along with structural production measures.
Oliver Blume, CEO of Volkswagen Group, said: “After long and intense negotiations, the agreement is an important signal for the future continuity of the Volkswagen brand, Volkswagen brand vehicles and component factories. Through the agreed package of actions, the company has set a decisive course for its future in terms of costs, capabilities and structures. We are now back in a position to successfully shape our own destiny. The Board of Directors and the wider management team make a greater than proportional financial contribution.
“Zukunft Volkswagen represents a fundamental reorganization of Volkswagen AG,” said Gunnar Kilian, Chief Human Resources Officer at the Volkswagen Group and Business Director at Volkswagen AG. “It was the stated goal of all negotiating partners not to reach a short compromise.” But to develop a basic agreement that has a financially sustainable impact and creates prospects for our factories and our workforce. After very intense negotiations, we have now succeeded in doing so with the Works Council. I would like to thank all participants, especially Kabir Our negotiators Arne Miswinkel and his team, who have shown outstanding 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 return Volkswagen to the top.
Thomas Schäfer, CEO of Volkswagen Passenger Cars, said: “We have set ourselves three priorities for the future of the Volkswagen brand: reducing excess capacity in Germany, reducing labor costs and achieving competitive development costs. The negotiations have led to workable results in all three areas.” Thanks to the agreed package of measures, we are in a position to significantly close the gap in our performance program and have thus laid the foundation for making Volkswagen the technological leader by 2030 – with a plan Clear, strong products and a clear commitment to Germany as a business location.
Some details
The agreed plant use provides for the following reorganizations of the Volkswagen brand’s factories for passenger cars:
Wolfsburg (production): In the future, the ID.3 and CUPRA Born models will also be manufactured at the headquarters. Production of the Golf and Golf Estate models will be moved to Puebla, Mexico from 2027. As a result, production will be concentrated on two assembly lines instead of today’s four. The future of the factory will also be secured at the end of the decade by the introduction of the electric Golf and another model based on the architecture of the future SSP electric car.
Wolfsburg (Technical Development): In order to be able to invest more in innovation, technical development is being reorganized to make it more effective. By leveraging the group’s synergy, the competitiveness of technical development will be enhanced sustainably. As part of this reorganization, approximately 4,000 positions will be eliminated by 2030. Tasks will also be transferred to other locations within the technical development network. In the future, the Volkswagen Passenger Car Brand Technical Development Department will be responsible for the development network of the core brand group.
Emden: The Emden plant will continue to produce the ID.7, ID.7 Tourer and ID.4 saloons, even after the facelift.
Osnabrück: The T-Roc Cabrio will be manufactured in Osnabrück until mid-2027. Options for a different use of the site are currently being explored.
Zwickau: Zwickau will remain the production site 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, new business areas will be developed in the context of the circular economy.
Dresden: Production of vehicles at the “transparent factory” in Dresden will be stopped at the end of 2025. Volkswagen AG is working on alternative options. This includes the possibility of Volkswagen AG participating in a third-party scheme.
Volkswagen Commercial Vehicles: The main plant for Volkswagen Commercial Vehicles in Hannover will remain the production site for ID.Buzz and Multivan. Concrete measures were agreed upon to reduce factory costs sustainably. This will enable Volkswagen Commercial Vehicles to create the basis for investing in future products using its own resources.
Volkswagen Group Components: In order to ensure the competitiveness of Volkswagen Group Components, it is targeted to achieve a sustainable efficiency increase of up to €3 billion 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 approximately 500 million euros annually. Volkswagen Group component sites will be maintained in Kassel, Braunschweig, Salzgitter, Hannover, Wolfsburg and Chemnitz, and plant costs will be reviewed on an ongoing basis. New working time models will be introduced to make production capacities more flexible.
“Volkswagen and AG Metall Strike Agreement on Cost Cutting in Germany” was originally created and published by Just automaticwhich is a trademark of GlobalData.
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