Volkswagen union warns against plant closures, backs $1.6 billion cost cuts

Volkswagen workers offered on Wednesday to back 1.5 billion euros ($1.6 billion) in cost savings if it rules out closing plants in Germany, but warned the automaker would face an historic battle if it pressed ahead with swingeing cuts.

The proposal comes a day ahead of a third round of crunch talks between workers and management over pay cuts and factory shutdowns in Germany in the fiercest dispute in years at Europe's biggest automaker, which - like other German industrial giants - is reeling from high costs and Chinese competition.

The IG Metall union, arguing the company was trying to push through more than 17 billion euros in cuts, said its offer was also contingent on stakeholders, including Volkswagen's controlling Porsche and Piech families, pitching in.


The union's proposal included forgoing bonuses for 2025 and 2026, among other savings.

In an internal memo posted to Volkswagen's intranet and reviewed by Reuters, the carmaker's board member for human resources said management welcomed that unions were open to measures tackling labour costs and capacity, but added that factory closures still could not be ruled out.