Volkswagen AG Reaches Landmark Agreement with IG Metall and Works Council
In a major breakthrough, Volkswagen AG has concluded a joint agreement with IG Metall (German labour union) and the Works Council, paving the way for a significant reduction in labour costs and a realignment of production capacities at its German locations.
Cost Savings and Structural Measures
The agreement, dubbed ‘Zukunft Volkswagen’ (Future Volkswagen), aims to achieve cost savings of over €4 billion per year in the medium term. This will be accomplished through a combination of short-term labour cost reductions, structural measures, and a decrease in development costs. Additionally, a reduction in capacity of 734,000 units across German plants is planned, enabling the company to invest in future products through to 2030.
Job Security and Workforce Reduction
The agreement also includes a socially responsible reduction of the workforce by more than 35,000 across Volkswagen’s German locations by 2030, accompanied by a newly formulated job security plan. This move will ensure sustainable cost savings for Volkswagen AG of more than €15 billion per year in the medium term.
Operational and Collective Realignment
The structural realignment of the company at an operational and collective level will create the conditions for achieving the return-on-sales target for the Volkswagen Passenger Cars brand in the medium term. This will be achieved through a reduction in capacity, a decrease in development costs, and a focus on core brand group development.
Plant Utilisation and Realignments
The agreement provides for several realignments at Volkswagen’s German plants, including:
- Wolfsburg: Production of the ID.3 and CUPRA Born models will commence, while production of the Golf and Golf Estate models will be relocated to Puebla in Mexico from 2027.
- Emden: The plant will continue to produce the ID.7 saloon, ID.7 Tourer, and the ID.4.
- Osnabrück: The T-Roc Cabrio will be manufactured until mid-2027, with options for alternative uses of the site being explored.
- Zwickau: The plant will remain a production location for the Audi Q4 e-tron and Audi Q4 e-tron Sportback, with a focus on a single production line from 2027.
- Dresden: Vehicle production at the ‘Transparent Factory’ will be discontinued at the end of 2025, with alternative options being explored.
Executive Comments
Oliver Blume, CEO of the Volkswagen Group, stated, “The agreement is an important signal for the future viability of the Volkswagen brand, Volkswagen Commercial Vehicles, and the component plants. We have set a decisive course for our future in terms of costs, capacities, and structures.”
Gunnar Kilian, Chief Human Resources Officer of the Volkswagen Group and Labour Director of Volkswagen AG, added, “Zukunft Volkswagen marks the fundamental realignment of Volkswagen AG. We have succeeded in developing a financially sustainable agreement that creates prospects for our plants and workforces.”
Thomas Schäfer, CEO of the Volkswagen Passenger Cars brand, noted, “We have set ourselves three priorities for the future of the Volkswagen brand: Reduce overcapacity in Germany, reduce labour costs, and achieve competitive development costs. The negotiations have led to viable results in all three areas.”
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