Electric vehicle sales in Europe have been struggling, with Volkswagen facing significant challenges, including declining electric model registrations and issues with its Cariad software division. The company has ended its job security agreement, plans to cut numerous jobs, and close three factories, including one in Belgium. Volkswagen aims to reduce costs by around €10 billion, proposing wage cuts and increased reliance on temporary labor while negotiating with the IG Metall union to maintain competitiveness.
The sales of electric vehicles have been struggling in Europe for several months, as recent data from Jato has shown. However, not all manufacturers are facing the same challenges, and the situation varies significantly across the industry.
Volkswagen in Serious Trouble
While Renault has managed to perform relatively well, despite a slight decline in sales, things are much more concerning for Volkswagen. The German automaker has been experiencing a significant turbulence for several months, with registrations plummeting, particularly for its electric models. Additionally, the issues surrounding its software subsidiary, Cariad, have led to numerous delays in launching future models, which has forced the company to cut jobs.
Unfortunately, the outlook is still grim, with conditions only worsening. The Wolfsburg-based company recently ended its employment guarantee agreement and is expected to initiate a major wave of layoffs next year. Concurrently, it plans to close no less than three factories, including one in Belgium that produced the Audi Q8 e-tron, whose sales ceased due to poor demand. It’s safe to say the situation is extremely challenging at present.
Volkswagen has initiated a comprehensive cost-cutting plan aimed at reducing its expenditures by around 10 billion euros, but the prospects for this plan are uncertain. The manufacturer aims to tighten its belt further, with no choice but to engage its employees, as stated in a recently released announcement. The German firm is indeed continuing discussions with the IG Metall union to reduce its payroll in an effort to maintain the competitiveness of the company and ensure its survival.
However, this will come at the expense of considerable sacrifices for employees. The Volkswagen group is requesting a 10% reduction in salaries for staff falling under the collective agreement of Volkswagen AG. Arne Meiswinkel, the lead negotiator for the automaker, explains that “to sustain jobs, we need to ensure the success of operations. That’s our goal. To achieve this, we must reduce labor costs within the company. We need to bring our labor costs in line with those of our competitors in the sector.“
Drastic Measures Ahead
Currently, the primary focus is on cost reduction for the company. Volkswagen has made several requests in addition to the salary cuts for employees. This will also involve increasing the use of temporary workers to adjust the workforce according to demand, which will enable the German group to cut salary expenses. Moreover, Volkswagen has stated that it has been unable to convert many apprenticeship contracts into permanent hires. The company will now revise the collective agreement to allow for more student interns.
Among other proposed measures, Volkswagen plans to eliminate the seniority bonus and the 170 euros monthly conventional bonus to cut costs. The company is also seeking the “removal of job security for employees who joined the company before 2005.” Additionally, the payment of bonuses for employees under the Tarif Plus agreement will be contingent upon their contributions to the company’s profits.
On the union side, representatives have spoken to Automotive News and expressed satisfaction that Volkswagen is open to negotiations. Thorsten Groeger, chief negotiator for IG Metall, remarked that “Volkswagen’s latest proposals represent a small initial signal of progress.” He emphasized that “the company has signaled its intent to engage in a process with us related to its cost objectives and profitability goals, which will also include considerations for all sites and job security.“