VW and union compromise on ‘fundamental realignment’

Volkswagen AG’s prolonged dispute with German union IG Metall has finally been resolved in a compromise agreement. Announced on 20 December, the deal is entitled ‘Zukunft Volkswagen’ (Future Volkswagen) and is intended to secure the automaker’s continued existence in an increasingly challenging market.

As a legacy automaker, Volkswagen has been struggling to adapt to new mobility requirements, namely growing competition from China and the huge investments demanded by electrification and software-defined vehicles. Lower than anticipated electric vehicle (EV) uptake in Europe has exacerbated its problems, and management claim significant production cuts and headcount reductions are essential. The aim of these particular labour talks was to address overcapacity in Germany, reduce labour costs and achieve competitive development costs.