On December 20, Volkswagen Group and its employee representatives reached an agreement to reduce the workforce by as many as 35,000 jobs in Germany by 2030, primarily through retirements and voluntary measures.
This decision, aimed at preventing further strike actions, guarantees that there will be no mandatory layoffs until 2030, while also ensuring that no plants will close in Germany. The VW Group employs over 120,000 individuals in the country, and a union representative had previously cautioned that the automaker hinted at the potential closure of plants in Germany—an alarming prospect for the first time in its history—with three sites identified as possible candidates.
Nonetheless, the renowned Transparent Factory in Dresden, where the Volkswagen ID.3 is manufactured, is set to halt operations in 2025. VW Group indicated that it is exploring alternative arrangements, including collaboration with a third-party partner. Meanwhile, a Belgian facility operated by VW Group’s Audi brand, responsible for producing the Q8 E-Tron electric SUV, is expected to shut down in February.
According to VW Group, the reduction in workforce is anticipated to yield savings of approximately 1.5 billion euros ($1.56 billion) each year. Coupled with other structural adjustments and decreases in technological development expenses, these savings may exceed 4 billion euros ($4.17 billion) annually in the medium run. Among these structural adjustments is a planned capacity cut of 734,000 units across the German plants each year.
Among the specific measures planned is the relocation of production for the Volkswagen ID.3 and its counterpart, the Cupra Born, to the VW Group’s primary facility in Wolfsburg, where the Golf is currently assembled. Starting in 2027, the production of the Golf will be shifted to Puebla, Mexico. Consequently, the Wolfsburg plant will streamline its operations to two assembly lines instead of the four that are presently in use.
Later in the decade, the Wolfsburg facility is also slated to produce the electric Mk9 Golf alongside another model, both of which will be based on the next-generation SSP dedicated electric vehicle platform.
In terms of reducing development expenses, VW Group plans to further merge its brand-specific technical teams. In the future, for instance, the technical team for the VW brand will oversee technical development across all VW Group mainstream brands.
This strategic move by VW Group responds to dwindling sales in Europe alongside fierce competition, particularly from China. The company, along with other German automotive brands, has experienced a decrease in market share in its key Chinese market due to a shortage of locally adapted EV models, an area where it once held a dominant position.
Image Source: sylv1rob1 / Shutterstock
