By Monica Raymunt
December 20, 2024
The Volkswagen factory in Wolfsburg, Germany. Photographer: Sean Gallup/Getty Images (Sean Gallup/Photographer: Sean Gallup/Getty )
(Bloomberg) -- Volkswagen AG reached an agreement with labor leaders to cut capacity at its namesake brand while avoiding factory closures, capping three months of tense negotiations and preventing further union walkouts.
VW agreed to keep the brand’s 10 German factories operational and reinstate job security agreements until 2030, the works council said Friday, confirming an earlier Bloomberg report. In exchange, workers agreed to forego some bonuses, reduce the number of trainees who get permanent employment and cut capacity at five sites by several hundred thousand units.
The measures, hammered out in five rounds of negotiations, are a far cry from the drastic savings that VW originally proposed. Labor leaders pushed back hard against plans to lay off thousands of workers, cut monthly wages and close three German factories to make the VW brand more competitive.
Still, the deal hands Chief Executive Officer Oliver Blume a fresh start to turn around Europe’s biggest carmaker as it confronts dwindling market share in China and slowing demand for electric vehicles in Europe and the US. Both sides had aimed to strike an agreement by Christmas.
VW shares rose 1.7% earlier Friday in anticipation of an agreement, though they’re down roughly 21% this year.
As part of the agreement, management convinced labor leaders to shift production of the Golf hatchback from Germany’s Wolfsburg factory to Mexico, and to reduce capacity at its EV plant in Zwickau by moving production of the ID.3 hatchback, ID.4 sport utility vehicle and Cupra Born to the Wolfsburg and Emden facilities.
Zwickau will continue to produce the Audi Q4 e-tron and become the site of a car recycling project. Wolfsburg is poised to make VW’s electric Golf that will be underpinned by a new platform developed with Rivian Automotive Inc. That model is expected to be ready in 2028.
“It’s a wholly important signal for Germany,” union IG Metall negotiator Thorsten Gröger said at a press conference. The deal is a “signal of the ability to find a solution for major problems.”
(Updates with additional details throughout.)
©2024 Bloomberg L.P.
(Bloomberg) -- Volkswagen AG reached an agreement with labor leaders to cut capacity at its namesake brand while avoiding factory closures, capping three months of tense negotiations and preventing further union walkouts.
VW agreed to keep the brand’s 10 German factories operational and reinstate job security agreements until 2030, the works council said Friday, confirming an earlier Bloomberg report. In exchange, workers agreed to forego some bonuses, reduce the number of trainees who get permanent employment and cut capacity at five sites by several hundred thousand units.
The measures, hammered out in five rounds of negotiations, are a far cry from the drastic savings that VW originally proposed. Labor leaders pushed back hard against plans to lay off thousands of workers, cut monthly wages and close three German factories to make the VW brand more competitive.
Still, the deal hands Chief Executive Officer Oliver Blume a fresh start to turn around Europe’s biggest carmaker as it confronts dwindling market share in China and slowing demand for electric vehicles in Europe and the US. Both sides had aimed to strike an agreement by Christmas.
VW shares rose 1.7% earlier Friday in anticipation of an agreement, though they’re down roughly 21% this year.
As part of the agreement, management convinced labor leaders to shift production of the Golf hatchback from Germany’s Wolfsburg factory to Mexico, and to reduce capacity at its EV plant in Zwickau by moving production of the ID.3 hatchback, ID.4 sport utility vehicle and Cupra Born to the Wolfsburg and Emden facilities.
Zwickau will continue to produce the Audi Q4 e-tron and become the site of a car recycling project. Wolfsburg is poised to make VW’s electric Golf that will be underpinned by a new platform developed with Rivian Automotive Inc. That model is expected to be ready in 2028.
“It’s a wholly important signal for Germany,” union IG Metall negotiator Thorsten Gröger said at a press conference. The deal is a “signal of the ability to find a solution for major problems.”
(Updates with additional details throughout.)
©2024 Bloomberg L.P.
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