Severe cutbacks at VW: How the turnaround is supposed to succeed - three plants threatened

Volkswagen wants to cut costs and may even close entire plants. According to the works council, initial concrete plans are now on the table. The answers to the most important questions:

What exactly is VW planning?

According to the works council, VW wants to close at least three of its current ten core brand plants in Germany. The capacity at the remaining locations is to be reduced. Layoffs for business reasons, which have been excluded at VW since 1992, are also planned. In addition, the company wants to cut the in-house tariff for its approximately 120,000 employees by ten percent across the board and is demanding zero rounds for the next two years. The company recently informed the employee side of these plans, and the works council has now made them public at information events at all locations. 

VW itself initially did not want to confirm the information. The company adheres to the principle of first discussing it internally with the employee side. For the tariff round scheduled for Wednesday, the company announced "concrete proposals to reduce labor costs."

How are IG Metall and the works council reacting?

The union and the works council immediately announced resistance to the savings plans. The company is "very close to escalation," warned works council chairwoman Daniela Cavallo. Thorsten Gröger, district manager of IG Metall Lower Saxony, had previously warned that warning strikes could occur from December 1st. Then VW's peace obligation expires, during which strikes cannot take place. "If the management wants to herald the decline of Germany, they must expect resistance they cannot imagine!" said Gröger.

Which locations are at risk?

Neither the company nor employee representatives have made precise statements about this so far. However, according to works council chairwoman Daniela Cavallo, none of the ten locations in Germany are safe. "All German VW plants are affected by these plans. None are safe!" The plant in Osnabrück, which recently lost a hoped-for follow-up order from Porsche, is considered particularly at risk. The Transparent Factory in Dresden has also been facing an uncertain future for a long time. VW is now openly considering ending vehicle production in Dresden. 

However, Dresden and Osnabrück are only the two smallest locations in Germany with low production volumes. That is unlikely to be enough to eliminate the existing overcapacity. CFO Arno Antlitz explained in September: "We are missing sales of around 500,000 cars, sales for around two plants." According to the works council, the company wants to at least partially solve the problem by reducing capacity everywhere.

How many jobs could be lost?

Works council chairwoman Daniela Cavallo speaks of tens of thousands of jobs at VW being at risk. According to a report by "Manager Magazin" from mid-September, the struggling company could reduce up to 30,000 jobs in Germany in the medium term. The company itself has not yet given a number. Overall, the Volkswagen AG - excluding subsidiaries like Audi and Porsche - employs around 120,000 people in Germany.

When are layoffs possible?

VW terminated the employment guarantee, which had been in place since 1992 and excluded business-related layoffs until 2029, in September. The contract expires at the end of the year. Six months later, business-related layoffs are possible, meaning from July 2025. Whether and when VW will make use of this possibility remains open for now. The company wants to quickly negotiate a new regulation with the union and the works council. The goal is to agree on a follow-up regulation by the time the employment guarantee expires in mid-2025.

How does VW justify the measures?

Brand chief Thomas Schäfer justified the planned cuts with the high costs at the German locations. "We can't continue as before," he said according to a statement. "We are not productive enough at the German locations and are currently 25 to 50 percent above our target in terms of factory costs. This means that some German plants are twice as expensive as the competition." Therefore, VW put together a savings package last year. However, due to the worsening situation in the automotive industry since then, that is no longer sufficient. The goal remains to increase the return on sales to 6.5 percent by 2026. Only in this way can the necessary investments in the future be financed.