Announced in late October, the restructuring plan of Volkswagen Group has just been made official. Initially, three factory closures were considered, according to statements made at the time by the union representative and chairwoman of the Volkswagen works council, Daniela Cavallo. However, this will not be the case. Nevertheless, 35,000 jobs will be eliminated in Germany by 2030. Negotiations between Volkswagen Group and the IG Metall union resulted in an agreement that includes early retirements without direct layoffs. In return, employee wages will not increase, and some bonuses will be spread over several years. Additionally, the production of Volkswagen Golf combustion and hybrid models will be relocated from Wolfsburg, Germany, to Mexico.
To drastically reduce production costs, Volkswagen Group has decided to implement several measures. These measures were mainly taken in response to the disappointing sales of electric cars for the German automotive group, which had invested billions in the early development of a 100% electric range (ID.). On a larger scale, the European automotive market is declining, and the coming months could exacerbate this situation. Thus, 35,000 positions will be eliminated in Germany by Volkswagen Group, and the historic Wolfsburg site will reduce from four to two assembly lines. The production of the combustion/hybrid Golf will be relocated to Mexico (Puebla) starting in 2027, where labor is cheaper. As a result of these measures, labor costs will be reduced by 1.5 billion euros (approximately $1.6 billion) per year.
In a statement released yesterday, Thomas Schäfer (CEO Volkswagen Passenger Cars) said:
“We had three priorities in the negotiations: reduce overcapacity at German sites, cut production costs, and bring development costs to a competitive level. We have reached viable solutions on these three points.”
Finally, regarding the electrification of its range, Volkswagen Group plans to focus on developing new hybrid engines. In November 2024, in Europe, sales of simple hybrid models (HEV) increased by 19.7% (source: ACEA). What is certain is that the arrival of the new 100% electric Golf has been confirmed, with this new model expected to benefit from the new SSP platform by 2028. This 100% electric Golf will be produced in Wolfsburg, alongside other electric cars such as the ID.3 and Cupra Born.
The Editorial Team
Photos: Volkswagen
