By Dominic Chopping and Mauro Orru


Volkswagen faces potential employee walkouts starting next month as the latest round of talks with union leaders over how to cut costs in an increasingly challenging auto industry ended without an agreement.

The German car maker spent weeks negotiating with the IG Metall union as it seeks to implement sweeping cost cuts across its domestic business. Management argued that an urgent reset of its cost base is needed as the group contends with waning demand for electric vehicles, fierce competition from lower-cost Chinese peers and a costly domestic manufacturing footprint.

IG Metall said Thursday that the latest round of talks ended without a breakthrough, with negotiations due to resume on Dec. 9. Union boss Daniela Cavallo said the obligation for workers not to strike ends on Nov. 30, opening the door to potential walkouts starting next month.

Volkswagen employs around 300,000 workers in Germany and operates 10 plants in the country. The company said the collective agreement applies to around 120,000 employees at plants in Wolfsburg, Braunschweig, Hanover, Salzgitter, Emden and Kassel and some subsidiaries.

Ahead of Thursday's wage talks, Volkswagen's top labor leader said the group was aiming to shut at least three factories in Germany, lay off tens of thousands of staff and cut worker's wages by 10% as part of plans to reduce costs and boost productivity.

A Volkswagen executive recently said rising costs of energy, materials and personnel mean some of the company's German plants are twice as expensive as those of competitors.

Those plans drew fierce push-back from the powerful labor representatives, who hold half of the seats on the auto maker's supervisory board and had threatened to call a strike if negotiations failed.

Workers' representatives had proposed wage increases be temporarily paid into a fund to finance any drop in working hours while bonuses would be reduced for two years--measures they said would save 1.5 billion euros ($1.58 billion) and avoid both factory closures and redundancies.

"The sustainable achievement of financial targets remains crucial in order to ensure competitiveness in an extremely challenging phase for the German automotive industry," Arne Meiswinkel, lead negotiator at Volkswagen, said in a statement after Thursday's talks.

Volkswagen's struggles come as traditional car makers across the globe grapple with a stuttering transition to electric vehicles, an uncertain economic and trade outlook, and increasing competition from Chinese rivals.

Ford Motor on Wednesday announced 4,000 job cuts in Europe, mostly in Germany, while Stellantis, General Motors and Nissan Motor have also recently outlined plans to reduce headcount.


Write to Dominic Chopping at dominic.chopping@wsj.com and Mauro Orru at mauro.orru@wsj.com


(END) Dow Jones Newswires

11-21-24 1253ET