VW may save its German factories after all

As reported by the Bloomberg news agency, the management is prepared to keep the plants running and reintroduce job security agreements until 2030 in return for employees waiving their bonus payments. Several informants are said to have stated this, but are not described in detail.

The fifth round of negotiations between Volkswagen and IG Metall was scheduled for this week. Both sides had emphasised in advance that they were aiming to reach an agreement before Christmas. However, despite several marathon negotiations, there was no officially confirmed breakthrough in the current round either.

The following points, which are allegedly being discussed as cost-cutting measures, should therefore be treated with caution: According to the Bloomberg report, the relocation of VW Golf production to Mexico is rumoured to be on the table. The VW icon is currently produced at the main plant in Wolfsburg. However, there is no further information as to when production will be relocated. The Golf VIII is only available as a plug-in hybrid, as the electric compact segment is served by the ID.3. Only the successor ID. Golf will be purely electric.

No more electric VWs from Zwickau?

Losing Golf production from Germany, of all places, would be a huge concession for the union and the works council. The VW plant in Puebla, Mexico, actually builds vehicles with a focus on the North American market, but is considered to be underutilised.

Another relevant point from an electromobility perspective is that the ‘production of VW-branded electric vehicles in Zwickau’ could be discontinued. This would affect the ID.3, ID.4 and ID.5 series, with the ID.4 also being built in Emden at the same time. It is not known whether the ID.3 and ID.5 will also be relocated to another plant.

Zwickau is an electric car plant that is not being fully utilised due to current demand. Just last week, it was announced that the contracts of around 1,000 temporary employees will not be extended and will expire in 2025. The night shift was cancelled at the end of 2023 and the plant has only been running two shifts since then.

With the end of VW production in Zwickau, overcapacity is to be reduced. However, the plant itself is to be retained. However, only the Audi Q4 e-tron (including the Sportback) and the Cupra Born would then be built there – and it remains to be seen what cost structure could be used to continue production of these model series. There is no information in the current reports about the allocation of new models to Zwickau. The Trinity model planned as the electric flagship is to roll off the production line in Zwickau, but probably not until 2032.

Neither Volkswagen nor IG Metall would comment on the information when asked by Bloomberg. On Thursday evening, however, Volkswagen Saxony dismissed media reports that the production of electric cars in Zwickau will be discontinued. On the contrary. Press spokesman Christian Sommer emphasised to MDR Sachsen that there are no plans to end electric car production in Zwickau. The claims are false. Stopping EV production would be equivalent to closing the site. And that can clearly be ruled out, emphasised Sommer. However, the VW spokesperson did not elaborate on which electric models and brands would be built in Zwickau in the future.

VW not only cancelled the job security agreement in September but also announced the closure of three German sites without naming any names. However, it was clear that the promising eMobility production (cars or components) would also be affected at three locations. VW rejected a joint proposal by IG Metall and the works council to include the next wage increase in a “future fund” as insufficient. In December, there were already several warning strikes around the further rounds of negotiations. If no agreement is reached, there is a threat of work stoppages on a much larger scale next year.

bnnbloomberg.ca, mdr.de (in German)