Volkswagen (VLKAF) is considering widespread layoffs and plant closures in its native Germany as the company’s vehicle sales decline.
The German automaker has announced plans that include a 10% reduction in pay across the board for its workers, along with wage freezes in 2025 and 2026.
Volkswagen is also proposing to close three factories and downsize all other plants in Germany, resulting in an unspecified number of layoffs at the company.
Taken together, the proposed reductions are the biggest in Volkswagen’s home market of Germany in decades.
Under the planned cuts, workers at Volkswagen will also lose bonuses and special payments on employment anniversaries.
The union, or German work council, that represents Volkswagen’s employees said in a statement that tens of thousands of jobs are at risk.
Management at Volkswagen says that the changes are needed to help counter a global slowdown in its sales, particularly of more expensive electric vehicles.
In September of this year, Volkswagen said that it planned to end its employment protection agreement that has been in place for its German workforce since 1994.
The proposed cuts at Volkswagen have been met with strong resistance from workers and IG-Metall, Germany’s leading labour union.
Volkswagen is scheduled to release its third-quarter financial results on October 30. The company’s stock has declined 19% this year to trade at 91.62 Euros per share (Cdn$137.66).
