Volkswagen is considering closing several plants in Germany and cutting wages by 10 percent as the ailing auto giant pursues a drastic cost-cutting plan, a media outlet said on Monday.
Workers’ representatives will brief VW workers at 10 German plants about management’s latest cost-cutting proposals at 1000 GMT, with thousands of jobs set to be cut.
Volkswagen CEO Oliver Blume wants to save around four million euros ($4.3 billion) in the group’s VW brand, according to financial newspaper Handelsblatt, citing company sources.
To achieve this, VW may close several factories in Germany, the first in the company’s 87-year history.
VW will take a 10 percent pay cut for all other employees and no pay increases in 2025 and 2026, Handelsblatt said. Bonus cuts are also on the table.
The plans are likely to be met with anger from worker representatives, who have accused VW bosses of mismanaging the 10-brand group and putting profits ahead of building a sustainable future for the manufacturer.
Volkswagen stunned workers in September when it said it was in need of a deep restructuring and was considering significant job cuts, including closing plants at home.
VW’s powerful works council and union leaders have vowed fierce resistance to the plans.
But VW says the cuts are necessary because of high production costs, a shift to electric vehicles and increasing competition in the key Chinese market.
Rival automakers in Germany’s flagship industry are facing similar headwinds, contributing to the broader downturn in Europe’s biggest economy.
Volkswagen recently cut its 2024 guidance and will report third-quarter results on Wednesday, which is expected to disappoint.
Also on Wednesday, Volkswagen will begin the second round of wage talks with the IG Metall union.
The union has asked for a seven percent wage increase, and the Volkswagen boss has rejected it.
