Volkswagen has announced a new agreement aimed at achieving €15 billion in annual cost savings over the medium term, without significantly affecting its 2024 outlook. The company emphasized that while no immediate closures are planned, it is exploring options for its Dresden plant and evaluating the potential sale or repurposing of its Osnabrück site. Some production operations are expected to be shifted to Mexico.
According to works council chief Daniela Cavallo, “No site will be closed, no one will be laid off for operational reasons, and our company wage agreement will be secured for the long term.”
However, as reported by Süddeutsche Zeitung, the agreement includes income cuts for approximately 4,000 Volkswagen managers. Starting in 2025 and 2026, their salaries will be reduced by 10 percent compared to current levels, with the reductions gradually easing in subsequent years until phasing out entirely by 2030.
The automaker has been in negotiations with labor unions since September to address several challenges, including competition from lower-cost Chinese manufacturers, stagnant demand in the European market, and slower-than-expected adoption of electric vehicles.
Back in late October, Volkswagen disclosed its intent to shutter at least three German facilities and implement workforce reductions across its remaining sites. These changes mark part of the company’s strategic efforts to remain competitive in a rapidly evolving industry.
Reporting contributed by Tommaso Lecca.
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