Volkswagen has announced a deal with European unions to avoid factory closures in Germany and massive strikes.
As part of the agreement, more than 35,000 jobs will be eliminated in a “socially responsible” manner by 2030, and production will be reduced by 734,000 units. The automaker expects to save $15.6 billion annually in the medium term, despite challenges such as economic slowdown in Europe and increasing competition from Chinese car imports.
The decision marks a historic moment, as VW has never closed a German factory in its 87 years of existence. Initially, the company had planned to shut down three facilities and reduce wages by 10% in an effort to cut $4.3 billion in costs.
Manufacturing in Germany is significantly more expensive than in other countries, where wages are much lower. The unions responded promptly, threatening strikes if the measures were implemented.
With reduced production, models like the Golf R and GTI, manufactured in Wolfsburg, may face delays, while the production of popular vehicles in the U.S., such as the Tiguan and Jetta, is expected to remain stable.
Despite cost-cutting measures, VW still faces challenging prospects for 2024, with global sales declining and a grim financial outlook in the short term.
Source: Car and Driver | Photo: Unsplash | This content was created with the help of AI and reviewed by the editorial team