After intense negotiations between Volkswagen AG, IG Metall (German union) and the works council, a joint agreement called “Zukunft Volkswagen” (Future Volkswagen) has been closed, as announced by the company.
In a statement, VW said it will realign production capacities at Volkswagen AG’s German plants and create the conditions for a reduction in labor costs of 1.5 billion euros a year to the level collectively agreed with an agreement on the company’s wage agreement. company until 2030.
Short-term reductions in labor costs and agreed structural measures by reducing capacity and lowering development costs will lead to cost savings of more than €4 billion per year in the medium term, VW said.
In addition, a capacity reduction of 734,000 units is planned at all German plants. This, the company stated, “will allow Volkswagen AG to lay the foundation for significant investments in future products until 2030.” VW also said the company’s structural realignment at an operational and collective level will create the conditions to “achieve the return on sales target for the Volkswagen Passenger Cars brand in the medium term.”
There was also agreement on what was called “socially responsible reduction of the workforce by more than 35,000 people at Volkswagen plants in Germany until 2030.” This includes a newly formulated job security plan until 2030.
VW said the deal will achieve sustainable cost savings for Volkswagen AG of more than 15 billion euros per year in the medium term. Of these, more than 4 billion euros per year will come from current negotiations on labor costs, structural and production measures and use of facilities.
Labor costs alone will be reduced by 1.5 billion euros per year.
VW said that a full and final assessment of the impact of these cost effects on the VW Group’s operating profits in 2025 and beyond will be made “in the coming weeks.” At this time, the company does not expect any significant impact on the fiscal 2024 outlook.
The jointly stated goal of the ‘Zukunft Volkswagen’ is for the Volkswagen passenger car brand, the core of Volkswagen AG, to become the world’s technologically leading volume manufacturer by 2030.
VW said there is also job security for Volkswagen AG’s workforce at the collectively agreed level until the end of 2030, as agreed during collective negotiations. “Zukunft Volkswagen” also “now guarantees commercially sustainable production at its German plants.” To this end, the company and the works council have agreed on a socially responsible reduction in the workforce of more than 35,000 people at Volkswagen plants in Germany until 2030, along with structural production measures.
Oliver Blume, CEO of the Volkswagen Group, said: “Following long and intensive negotiations, the agreement is an important signal for the future viability of the Volkswagen brand, Volkswagen Commercial Vehicles and component plants. With the agreed package of measures, the company has set a decisive course for its future in terms of costs, capacities and structures. We are now once again in a position to successfully shape our own destiny. The Board of Directors and the management team in general are making a greater than proportional financial contribution.”
Gunnar Kilian, Chief Human Resources Officer of the Volkswagen Group and Chief Labor Officer of Volkswagen AG, said: “Zukunft Volkswagen’ marks the fundamental realignment of Volkswagen AG. The stated goal of all negotiating partners was not to reach a short-term compromise, but to develop a fundamental agreement that would have a financially sustainable effect and create prospects for our plants and our workforce. After very intense negotiations, we have now achieved it together with the works council. I would like to thank everyone involved, especially our lead negotiator, Arne Meiswinkel, and his team, who have shown exceptional commitment. The outcome of the negotiations will allow us to position our company for the future, maintain production in Germany and make it competitive to take Volkswagen back to the top.”
Thomas Schäfer, CEO of the Volkswagen Passenger Cars brand, said: “We have set 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 viable results in all three areas. With the agreed package of measures, we are in a position to largely close the gap in our performance programme. “In this way, we have created the basis to make Volkswagen the technologically leading volume manufacturer by 2030, with a clear plan, strong products and a clear commitment to Germany as a place of business.”
Some details
The agreed plant utilization provides for the following realignments for the Volkswagen Passenger Car brand plants:
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 move to Puebla, Mexico, starting in 2027. As a result, production will be focused on two assembly lines instead of the current four. The future of the plant will also be assured at the end of the decade with the introduction of the electric Golf and another model based on the future SSP electric car architecture.
Wolfsburg (Technical Development): In order to invest more in innovation, Technical Development is being reorganized to make it more efficient. Using the Group’s synergies, the competitiveness of Technical Development will be strengthened in a sustainable way. As part of this realignment, around 4,000 jobs will be eliminated between now and 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 main brand group.
Emden: The Emden plant will continue to produce the ID.7 saloon, ID.7 Tourer and ID.4 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 continue to be a production site for the Audi Q4 e-tron and the Audi Q4 e-tron Sportback. As a result, vehicle production will be focused on a single line from 2027.
In addition, new business areas will be developed in the context of the circular economy.
Dresden: Vehicle production at the ‘Transparent Factory’ in Dresden will be discontinued at the end of 2025. Volkswagen AG is working on alternative options. These include the possibility of Volkswagen AG participating in a third-party scheme.
Volkswagen Commercial Vehicles: The main Volkswagen Commercial Vehicles plant in Hannover will continue to be the production site for the ID.Buzz and the Multivan. Concrete measures have been agreed to sustainably reduce factory costs. This will allow Volkswagen Commercial Vehicles to create the basis for investing in future products using its own resources.
Volkswagen Group Components: To ensure the competitiveness of Volkswagen Group Components, a sustainable increase in efficiency of up to €3 billion is targeted cumulatively by 2030. The focus is on increasing economies of scale by systematically focusing the portfolio of products into strategic core components. On this basis, labor costs will be reduced by around 500 million euros per year. The Volkswagen Group Components plants in Kassel, Braunschweig, Salzgitter, Hannover, Wolfsburg and Chemnitz will be maintained and factory costs will be continually reviewed. New working time models will be introduced to make production capacities more flexible.
“Volkswagen and IG Metall reach agreement on cost cuts in Germany” was originally created and published by Automatic onlya brand owned by GlobalData.
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