2024-12-23 16:55:07 :
(Bloomberg) — Volkswagen AG managers will face deep pay cuts in the coming years as part of a labor deal to make Europe’s largest automaker more competitive.
Around 4,000 Volkswagen managers will forgo bonuses worth around 10% of their annual income next year and in 2026, with smaller cuts by the end of the decade, the Süddeutsche Zeitung newspaper reported on Sunday. The newspaper said union members are calling on senior leadership, including chief executive Oliver Bloom, to give up more than 10% of their salaries.
The measures are part of a restructuring deal aimed at cutting costs at the eponymous Volkswagen brand while avoiding factory closures. Volkswagen reached a deal on Friday, averting further strikes after three months of tense negotiations. While both sides welcomed the deal, the cuts fell short of the tough action management initially called for.
The measures “lacked the urgency to keep up with the pace of industry change,” Jefferies analyst Philippe Houchois said in a note.
Volkswagen shares were down 2.4% as of 11:35 a.m. in Frankfurt on Monday, and have fallen by nearly a quarter this year.
Blum is looking for a fresh start to turn around Volkswagen as it faces declining market share in China and slowing demand for electric vehicles in Europe and the United States. Volkswagen and its peers also face billions of euros in fines if they fail to comply with tougher European fleet emissions rules due to take effect next year.
The labor agreement includes reducing production capacity by hundreds of thousands of units at five plants and cutting more than 35,000 employees over the next five years. These measures are expected to save €4 billion ($4.2 billion) per year in the medium term.
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