Volkswagen pitches closure of three plants, layoffs

Oct. 28 (UPI) -- Volkswagen told its work council on Monday that the company is contemplating closing three plants in Germany and reducing its workforce in other locations.

Daniela Cavallo, head of the works council, said Volkswagen revealed to them a 10% reduction for all workers and pay freezes in 2025 and 2026. Cavallo said the total impact would result in an 18% pay reduction by the end of the impacted period.

"In concrete terms, this means taking out even more products, volumes, shifts, and entire assembly lines far beyond what we have already done," Cavallo said in a statement, according to CNBC. "All German VW plants are affected by this. None of them are safe."

Volkswagen said the move is being considered because of current economic conditions. The European auto giant is in labor negotiations with the work council and the plan comes before Volkswagen is preparing to release a new quarterly report on Wednesday.

The automaker is blaming its economic woes on slumping sales in China, which had been benefiting Volkswagen. The company said sales in the Chinese market have dropped 20% in the first half of 2024.

The drop led Volkswagen to cancel a 30-year agreement that shielded factory workers from layoffs through 2029, enabling it to make layoffs starting in 2025.

In the meantime, German Chancellor Olaf Scholz has called on auto industry leaders and union heads to come together for a summit to reinvigorate the economy.