Automotive News Europe — 2024-09-23
Automotive Industry
VW has said it is considering plant closures in Germany to cut costs and close a gap with competitors.
Volkswagen Group CEO Oliver Blume expects labor unions to make proposals on how to cut costs and close a gap with competitors, two days before talks over plant closures and new wage deals.
VW earlier in September 2024 cancelled long-standing job security agreements and said it was considering plant closures in its German home market for the first time.
This prompted a clash with unions who have pledged fierce resistance. In a sign of how tense the situation has become, talks about a new wage agreement and future budgets are slated to start on 25 September 2024, a month ahead of schedule.
Unions have ruled out plant closures, leaving the question of where savings will come from without job cuts.
"I expect to see significant movement there in order to make progress on the cost side," Blume told broadcaster RTL/ntv."
"Costs at Volkswagen are too high compared to international competition," Blume said, adding the group would be reviewing all levers in the coming weeks regarding cuts of development, materials, fixed, manufacturing and retail costs.
He said labor costs in Germany were twice the European level, also telling German broadcaster ZDF that the aim was to get a broad deal on investments and labour agreements this year.
Blume's comments came as automakers and suppliers held a virtual meeting with German Economy Minister Robert Habeck on 23 September 2024 regarding the health of the auto industry.
After the meeting Habeck said the three parties in Germany's ruling coalition will look to overcome their differences and seek ways to help stabilize the country’s struggling automakers.
No scrappage bonus
Finance Minister Christian Lindner had earlier signaled that he is unlikely to back a proposal from Chancellor Olaf Scholz’s SPD party to reintroduce a scrappage bonus worth €6,000 ($6,666) for drivers who swap their combustion car for an electric vehicle.
"I don't want to focus on the proposals of other parties right now," said Lindner, a fiscal hawk who is the chairman of the Free Democrats, at a news conference in Berlin.
It was the latest evidence of discord within the unwieldy governing alliance, which has been squabbling publicly over limited funds in recent months.
The auto industry has been jolted by a drop in demand for EVs after governments including Germany scaled back financial incentives.
Automakers have also been particularly hard hit by waning demand from China, a key market for VW, Mercedes-Benz and BMW.
BMW and Mercedes issued profit warnings in recent weeks, partly because of slumping demand in China.