German automaker Volkswagen (DE:VOW) announced that it would cut over 35,000 jobs in its domestic market by 2030. The decision is a part of several changes that the company plans to implement after reaching an agreement with union representatives associated with workers at its German sites. The agreement, which includes an aggressive cost-cutting plan, followed intense and prolonged discussions with workers’ union.
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Additional Details of Volkswagen’s Agreement with Union
Volkswagen had previously announced that it was considering shutting down certain production sites in Germany, its first-ever closure in the domestic market. The company’s decision followed weak demand in the European markets and slower-than-anticipated adoption of electric vehicles (EV). However, the announcement faced backlash and warnings of strikes from labour representatives.
As part of the agreement between Volkswagen, IG Metall, and the Works Council, the company is realigning production capacities at its German locations. It plans to reduce its capacity by 734,000 units across the German plants, which would drive a reduction in labour costs of €1.5 billion per year at the collectively agreed level. In particular, production at the company’s Transparent Factory in Dresden will be discontinued at the end of 2025, while a plant in Osnabrueck will produce T-Roc SUVs only through mid-2027.
Notably, through capacity reduction, a decrease in development costs, and other structural measures, the company expects to deliver cost savings of over €4 billion per year in the medium term. Such savings would help the company make vital investments in future products through 2030.
Is Volkswagen Stock a Buy, Sell, or Hold?
Amid the ongoing pressures, analysts have a Moderate Buy consensus rating on Volkswagen stock based on six Buys, five Holds, and two Sells. The average VOW stock price target of €113.85 implies 29.3% upside potential. Shares have declined more than 20% year-to-date.
