Volkswagen may not close their factories in Germany after all

A new Bloomberg report suggests that Volkswagen may actually be working on a deal to keep its factories in Germany open.

The report said the automaker is considering keeping its plants running while renewing labor protection agreements until 2030, with the trade-off being that workers will forgo bonus payments, according to an anonymous source.

Earlier this month, 100,000 workers walked out of nine Volkswagen factories across Germany, including its only EV factory, setting up assembly lines in a civil war over reduced wages, job losses, and the future of the automaker. The strike came after weeks of negotiations in which Volkswagen did not back down from its plan to cut thousands of jobs and close factories in Germany – the first in the carmaker's 87-year history. Volkswagen plans to close at least three factories, lay off thousands of workers, and cut the wages of those who remain by 10%, all as it struggles to stay afloat amid fierce competition from China. Volkswagen has announced that they will officially close their Audi plant in Brussels where they make the Audi Q8 E-Tron.

Since then, CEO Oliver Blume has been locked in a bitter dispute with IG Metall, with management demanding massive cutbacks while workers are threatening more strikes if a fair deal is not reached – but now there seems to be a glimmer of hope.

Cost-cutting options on the table include moving Golf production from Germany's Wolfsburg plant to Mexico, and ending production of VW-branded electric cars in Zwickau to reduce capacity, the report said.

Of course, Bloomberg noted that the details of the deal are subject to change and the talks will still end without a deal, so Volkswagen and IG Metall are still in a precarious position. But the deal will prevent major departures, but the latest round of proposals is not enough to pull VW out of its hole. A previous plan to lay off workers, cut wages, and close the three plants would have helped save 17 billion euros ($17.6 billion).

Bloomberg writes:

Bonus payments to workers and VW's restructuring won't be enough to save the extra four billion euros each year, which management needs to shore up margins, UBS analyst Patrick Hummel said on Thursday. “We're not sure this is the final package,” he told Bloomberg Television.

From the agreement discussed now, production of VW's ID.3 hatchback and ID.4 SUV will end in Zwickau and move to Wolfsburg and Emden.

This comes at a time when VW is restructuring its business to reduce costs, while seeking to scale back production and development processes, shaving months off development cycles for certain projects to help tighten belts, while rethinking its EV sales model to stay afloat. more competition. Volkswagen is facing a sharp decline in car sales in China, its core market, while at the same time facing challenges from BYD and other Chinese carmakers entering the European market.

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