After intensive negotiations between Volkswagen AG, IG Metall (German trade union) and the works council, a joint agreement entitled ‘Zukunft Volkswagen’ has been signed. [Future Volkswagen] has been completed, the company announced.
In a statement, VW said it is realigning production capacities at Volkswagen AG’s German sites and creating the conditions for a reduction in labor costs by €1.5 billion per year at the collectively agreed level, with an agreement on the wage settlement of the company until 2030.
The short-term reduction in labor costs and the agreed structural measures through capacity reduction and a reduction in 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 in the German factories. This, the company said, “will enable Volkswagen AG to lay the foundation for significant investments in future products up to 2030.” VW also said that the company’s structural realignment at operational and collective levels will create the conditions for “achieving the return-on-sales target for the Volkswagen Passenger Cars brand in the medium term.”
There was also agreement on what was called ‘a socially responsible workforce reduction of more than 35,000 employees at Volkswagen’s German sites by 2030’. This includes a newly formulated job security plan up to and including 2030.
VW said the agreement will deliver sustainable cost savings of more than €15 billion per year for Volkswagen AG in the medium term. Of this, more than €4 billion per year will come from current negotiations on labor costs, structural and production measures and the use of installations.
Labor costs alone will be reduced by 1.5 billion euros per year.
VW said a full and final assessment of the impact of these cost effects on the VW Group’s operating profit in 2025 and subsequent years will be made “in the coming weeks.” At this time, the company does not expect any significant impact on its fiscal 2024 outlook.
The jointly stated goal of ‘Zukunft Volkswagen’ is for the Volkswagen Passenger Cars brand, the core of Volkswagen AG, to become the technologically leading volume manufacturer worldwide by 2030.
VW said there will also be job security for Volkswagen AG employees at the collectively agreed level until the end of 2030, as agreed during the collective labor agreement negotiations. ‘Zukunft Volkswagen’ now also ‘ensures commercially sustainable production at the German sites’. To this end, the company and the works council have agreed on a socially responsible workforce reduction of more than 35,000 employees at the German Volkswagen sites by 2030, in addition to structural production measures.
Oliver Blume, CEO of the Volkswagen Group, said: “After long and intensive negotiations, the agreement is an important signal for the future viability of the Volkswagen brand, Volkswagen Commercial Vehicles and the parts factories. With the package of measures that have been agreed, the company has set a decisive course for the 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 broader management team make a more than proportionate financial contribution.”
Gunnar Kilian, Chief Human Resources Officer of the Volkswagen Group and Labor Director of Volkswagen AG said: “Zukunft Volkswagen marks the fundamental realignment of Volkswagen AG. It was the stated goal of all negotiating partners not to find a short-term compromise, but to develop a fundamental agreement that has a financially sustainable impact and creates prospects for our factories and workforce. After very intensive negotiations, we have now succeeded in doing this together with the works council. I would like to thank everyone involved, especially our chief negotiator Arne Meiswinkel and his team, who have shown excellent commitment. The outcome of the negotiations will enable us to position our company for the future, maintain production in Germany and make it competitive, to lead Volkswagen back to the top.”
Thomas Schäfer, CEO of the Volkswagen Passenger Cars brand said: “We have set ourselves three priorities for the future of the Volkswagen brand: reducing overcapacity in Germany, reducing labor costs and achieving competitive development costs. The negotiations have led to achievable results in all three areas. With the agreed package of measures, we are able to largely close the gap in our performance program. We have thus laid the foundation for making Volkswagen the technologically leading volume manufacturer by 2030 – with a clear plan, strong products and a clear commitment to Germany as a location.”
Some details
The agreed factory use provides for the following reallocations for the factories of the Volkswagen Passenger Cars brand:
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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 in Mexico from 2027. As a result, production will concentrate on two assembly lines instead of four today. The future of the factory will also be secured at the end of this decade with the introduction of the electric Golf and another model based on the future SSP architecture for electric cars.
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Wolfsburg [Technical Development]: In order to invest more in innovation, Technical Development is being reorganized to make it more effective. By making use of the Group’s synergies, the competitiveness of Technical Development will be sustainably strengthened. As part of this realignment, approximately 4,000 jobs will be lost by 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 core brand group.
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Emden: The Emden plant will continue to produce the ID.7 sedan, ID.7 Tourer and the ID.4 even after the facelift.
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Osnabrück: The T-Roc Cabrio will be produced in Osnabrück until mid-2027. Possibilities for another use of the site are currently being investigated.
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Zwickau: Zwickau remains a production location for the Audi Q4 e-tron and Audi Q4 e-tron Sportback. As a result, vehicle production will concentrate on one line from 2027.
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In addition, new industrial estates will be developed in the context of the circular economy.
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Dresden: Vehicle production at the ‘Transparent Factory’ in Dresden will cease 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.
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Volkswagen Commercial Vehicles: Volkswagen Commercial Vehicles’ main plant in Hannover remains the production location for the ID.Buzz and the Multivan. Concrete measures have been agreed to sustainably reduce factory costs. This will allow Volkswagen Commercial Vehicles to lay the foundation for investments in future products with its own resources.
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Volkswagen Group Components: To ensure the competitiveness of Volkswagen Group Components, the aim is to achieve a sustainable efficiency increase of up to €3 billion in total 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 per year. The Volkswagen Group Components locations in Kassel, Braunschweig, Salzgitter, Hannover, Wolfsburg and Chemnitz will be retained and factory costs will be continuously reviewed. New working time models will be introduced to make production capabilities more flexible.
“Volkswagen and IG Metall enter into agreement on cost savings in Germany” was originally created and published by Just Auto, a brand owned by GlobalData.
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