Volkswagen agreed not to close factories in Germany

VW was considering closing three factories in Germany and was urging its workforce to accept a 10% pay cut.

At the time, the union was asking for a 7% raise.

Although the deal also saw a reduction in production capacity at the factories, it was celebrated by union leaders.

“No sites will be closed, no one will be fired for operational reasons and our company’s wage agreement will be secured for the long term,” said Daniela Cavallo, head of IG Metall’s works council.

“We have achieved a rock-solid solution in the most difficult economic conditions,” he said.

By 2030, 35,000 job cuts are expected to be found through various solutions, such as an early retirement offer.

Under the agreement, previously agreed 5% wage increases in 2025 and 2026 will also be suspended.

The union said it would help “support transformation” at the company.

Germany will cut the number of apprenticeships offered annually from 1,400 to 600 from 2026, and it will look to move some production to Mexico.

It is also looking at alternative options for the Dresden and Osnabrück sites.

But VW Group CEO Oliver Blume said in a statement that the deal was “an important signal for the future viability of the Volkswagen brand.”

The closure of factories in Germany would be unprecedented in the history of the manufacturer.

VW, along with other German automakers, has been badly hit by declining demand for its cars in China, a previously lucrative market.

At the same time, Chinese brands are moving towards Europe, increasing competition for sales.

During the talks, about 100,000 workers joined short-term so-called “warning strikes” at sites across the country to put pressure on company management.

The latest round of talks began on Monday, with negotiators aiming to resolve the issues before Christmas.

German Chancellor Olaf Scholz also welcomed the announcement, describing it as a “good, socially acceptable solution”.