Volkswagen plans to shut at least three factories in Germany, lay off thousands of staff and shrink its remaining plants as it plots a deeper-than-expected overhaul.
Europe’s biggest carmaker has been negotiating for weeks with unions over its plans to revamp its business and lower costs, including considering plant closures in Germany for the first time, Reuters reported.
“Management is absolutely serious about all this. This is not sabre-rattling in the collective bargaining round,” Daniela Cavallo, Volkswagen’s works council head, told several hundreds of employees at the carmaker’s biggest plant, in Wolfsburg, the report added.
The plans also include pushing through universal pay cuts at the main VW brand of 10 percent and shrinking all remaining sites in the country, Cavallo, who also sits on VW’s supervisory board, said.
Chief Executive Officer Oliver Blume has pointed to high costs at the VW brand, which is struggling with demand slump in Europe and intensifying competition from Chinese companies like BYD. Unionists are saying that workers are made to pay for boardroom mistakes, including a botched EV shift and bad pricing policy, according to reports.
While its premium brands, including Audi and Porsche have been the carmaker’s biggest source of profit in recent years, they’re now struggling. Porsche AG recently said it’s weighing cost cuts and reviewing its model lineup after a demand slump in China hit its profits.
VW’s India plans
According to media reports, Mahindra & Mahindra (M&M) and Skoda Auto Volkswagen India (SAVWIPL), a subsidiary of the Volkswagen Group, are reportedly in the final stages of establishing a 50:50 joint venture. This partnership aims to share costs, technology, and vehicle platforms for future product development.
The proposed joint venture will concentrate primarily on the development of EVs for both the Indian and international markets, although it will also encompass fossil fuel-based models. As per reports, an official announcement is expected by the end of the year.
The collaboration will exclude sedans and SUVs currently sold by Volkswagen and Skoda. It venture will also leave out Audi and Porsche brands under the Volkswagen Group. Production of the new models will take place at SAVWIPL and Mahindra's facilities in Chakan near Pune, as per the reports.
(With inputs from agencies)