VW has been in talks with labour representatives since September over measures it says are necessary for it to compete with cheaper Chinese rivals, lacklustre demand in Europe and slower-than-expected adoption of electric vehicles.
Around 100,000 workers have already staged two separate strikes in the past month, the largest in VW’s 87-year history, protesting against plans to cut wages, reduce capacity and potentially shut German plants for the first time.
The fifth round of negotiations has been under way since Monday and continued deep into the night at a hotel in Hanover this week, with negotiators only taking short breaks to sleep and fuelling up on coffee, curried sausage and fruit.
Both sides have said they are aiming to secure a deal and give workers some certainty by Christmas.
“We are getting closer,” a source familiar with the negotiations said. A second source close to the negotiations confirmed that view, though a third cautioned that the talks could still stumble.
“We can still make a wrong turn on the home stretch,” the source said.
The crisis at VW has hit at a time of uncertainty and political upheaval in Europe’s largest economy, as well as wider turmoil among the region’s automakers.
How to fix Germany’s sluggish growth has taken centre stage as a campaign issue ahead of a snap election in February, while Chancellor Olaf Scholz, trailing in the polls, has urged VW to keep all its factories open.
VW workers strongly oppose plant closures, and two sources said the latest talks include a scenario on keeping the plants open.
But VW has previously signalled the closures may be necessary to find around €4 billion (US$4.2 billion) in savings to respond to what it expects is structurally weaker demand in Europe.
VW’s structure is unique, with management having to get approval from a two-thirds majority in the 20-strong supervisory board for any decision to build or move a production plant.
That means 10 members representing German labour unions can veto any far-reaching plans that affect factories.
Any agreement with the unions would require approvals by VW committees which could complicate and delay a possible deal.
VW’s board and members of the supervisory board are expected to meet this afternoon to discuss an agreement, according to people familiar with the matter.
There is no consensus among management over the issue of plant closures, another source said.
Strikes could prove costly
Yesterday, Germany’s powerful IG Metall union had accused VW of delaying critical decisions toward an agreement, adding that both sides disagreed in key areas and that talks could still collapse.
UBS analyst Patrick Hummel estimated last week that a headcount reduction of at least 30,000 was necessary to deliver on VW’s 6.5% operating profit target for 2026.
“A ‘lukewarm’ compromise (that is without plant closures) would likely not be appreciated by the market,” Hummel wrote in a note.
But IG Metall’s threat of strikes is a powerful bargaining chip.
UBS estimates every strike day in Germany may cost VW up to €100 million in revenue and around 20 million in operating profit, based on 2,000-3,000 lost vehicle production a day.
Shares in VW were down 1.17%.
Citing people familiar with the matter, Bloomberg reported earlier that VW and unions were nearing an agreement to restructure the VW brand without closing factories in Germany.
Management is willing to keep plants running and restore job security agreements until 2030 in exchange for workers foregoing bonus payments, the report said.
The crisis at VW has already spilled over to its investors, with top shareholder Porsche SE PSHG_p.DE warning of potential impairments of up to €20 billion on its 31.9% stake in the carmaker.