Crisis-hit Volkswagen mulls closing at least three German plants

Volkswagen recently cut its 2024 outlook and is due to publish third-quarter results on Wednesday, which are expected to disappoint

Ailing auto giant Volkswagen plans to close at least three factories in Germany and slash tens of thousands of jobs as part of drastic cost-savings drive, workers' representatives said Monday, calling the proposed cuts "of historic dimensions".

The plan laid out by management, which affects the namesake VW brand, also includes a 10-percent pay cut for all staff, the company's powerful works council said in an update to staff.

Bosses also want to downsize remaining plants and move "entire departments" abroad or outsource them completely, the statement added as thousands of workers assembled for meetings at the company's plants nationwide.

There was no immediate comment from Volkswagen bosses, with a spokesman citing the "confidential" nature of the talks with unions and the works council.

The financial daily Handelsblatt had earlier reported that VW was seeking around four billion euros ($4.3 billion) in savings, including through plants closures, pay cuts and bonus reductions.

Factory closures in Germany would be a first in the company's 87-year history.

"Volkswagen is shocking its workforce" with cost-cutting plans "of historic dimensions", the works council said in the statement after informing employees in all 10 German plants of the proposals.

"This is the plan of Germany's largest industrial group to start the sell-off in its home country," Daniela Cavallo, head of the works council, told staff at VW's Wolfsburg headquarters.

"It is a firm intention to bleed dry the regions where the plants are located," she said. "And it is the clear intention to send tens of thousands of Volkswagen employees into mass unemployment."

The 10-brand Volkswagen group employs more than 680,000 people globally, around 120,000 of whom work at the core VW brand in Germany.

Volkswagen stunned employees in September when it said it was in need of a deep restructuring and was considering significant job cuts as well as shuttering plants on its home turf.

VW argues the cuts are necessary as it struggles with high production costs, a stuttering switch to electric vehicles and rising competition in key market China.

Rival carmakers in Germany's flagship industry are facing similar headwinds, contributing to a wider downturn in Europe's largest economy.

In Berlin, the government cautioned against a mass jobs cull at Volkswagen.

Chancellor Olaf Scholz's position was that "possible wrong management decisions from the past must not be at the expense of the employees", spokesman Wolfgang Buechner said, adding that the focus should be on "preserving and securing jobs".

The works council acknowledged Monday that VW had "serious problems".

But staff representatives accuse VW's leaders of mismanaging the group and putting profits above building a sustainable future for the manufacturer, and have vowed strong resistance to the cost-cutting measures.

Cavallo on Monday said the board of management still had no "plan for the future".

"What on earth are such cuts for?" she said, charging that "there is still no plan of attack on the table, no concept for the future product pipeline and no idea of how we can regain our technological leadership."

She warned that tensions could "soon escalate", hinting at potential strike action.

Volkswagen recently cut its 2024 outlook and is due to publish third-quarter results on Wednesday, which are expected to disappoint.

Also on Wednesday, Volkswagen will begin a second round of wage talks with the IG Metall union. The union has asked for a seven-percent pay rise, which Volkswagen bosses have rejected.

Volkswagen's troubles are the latest in a spate of bad news for the German economy, which is expected to shrink for a second consecutive year in 2024.