The potential measures also include trying to end the company’s three-decades-old pact with workers to keep jobs secure, the company said Monday. VW’s main target is its underperforming nameplate passenger car brand but other group operations must also find savings.
Any shutdowns would mark the first closures in Germany during the company’s 87-year history.
Raising returns at the VW brand has become tougher with higher logistics, energy and labor costs. The nameplate’s margin fell to 2.3% during the first half, compared to 3.8% a year ago. The company has also lost momentum in its main market China with its EV model range far behind competitors.
VW employs about 650,000 workers globally, almost 300,000 of which are in Germany. Half the seats on the company’s supervisory board are held by labor representatives, and the German state of Lower Saxony, which owns a 20% stake , often sides with trade union bodies. The setup is part of a labyrinthine governance system where management must gain the billionaire Porsche-Piech family and labor side support for major decisions.
Volkswagen is also considering trying its pact with unions to avoid any job cuts until 2029.
VW chief executive officer Oliver Blume said in a statement that the market was getting “tougher”.
“The economic environment has become even tougher and new players are pushing into Europe.
“Germany as a business location is falling further behind in terms of competitiveness.”
Daniela Cavallo, chair of the council that represents VW’s workers, has told employees that VW is considering shutting factories in Germany and cutting jobs.
In a note circulated to employees, reported by the Financial Times, Cavallo explained that VW brand chief executive Thomas Schäfer “admitted” that planned savings had fallen short.
Cavallo added:
“As a result, the executive board is now questioning German plants, the VW in-house collective wage agreements and the job security programme running until the end of 2029.”
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