By Christoph Steitz and Christina Amann
FRANKFURT/BERLIN, Sept 4 (Reuters) – Shares in Volkswagen
The deal on the biggest restructuring in the group’s 89-year history includes a further 50,000 job cuts, bringing the group’s total to 100,000, and leaves open the future of four of its German plants.
Management, outnumbered by unions and Lower Saxony on the supervisory board, had considered calling a shareholder meeting to push through its demands, which would have been an unprecedented stakeholder conflict at the carmaker.
“The agreement … is a positive sign for Volkswagen and the capital market – even if it involves severe cutbacks amongst the workforce and within the group,” said Moritz Kronenberger of Volkswagen shareholder Union Investment.
“The ball is now entirely in the Executive Board’s court. There are no more excuses,” he said with regard to the implementation of the program.
The turnaround prospects come as Volkswagen faces pressure from U.S. import tariffs, a stagnant European market as well as aggressive Chinese rivals that have all gnawed at the group’s operating margin, which stood at 3.8% in the first half, down from 7.9% in 2022, its peak over the last decade.
While the deal gave no details on where and by when the cuts would happen, Volkswagen CEO Oliver Blume previously said that half of the savings would have to come from Germany, suggesting around 25,000 job cuts at its local operations.
Details of the job cut program will have to be hammered out between management and unions, which secured a job guarantee for most of Volkswagen’s German operations until 2030 as part of a previous turnaround package in 2024.
Deutsche Bank analysts said that while the agreement did not solve all of Volkswagen’s challenges “it removes one of the biggest investor concerns: whether the company is still capable of making the difficult decisions required to address them.”
(Editing by Ludwig Burger; Editing by Sharon Singleton)
