Potential strikes at Volkswagen’s German sites could begin on 1 December. Credit: HB Photo/Shutterstock.

Volkswagen‘s workers union has proposed $1.6bn in cost savings, contingent on avoiding plant closures in Germany, reported Reuters.

To enhance competitiveness and maintain sustainability, the automaker is planning to implement cost reductions, including potential factory closures and layoffs.

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In September, the automaker said it is scrapping labour agreements in Germany to pave the way for job cuts at six plants in Germany to reduce costs by over $17bn.

The latest proposal comes a day before a third round of negotiations between workers and management over pay cuts and factory closures in Germany.

The proposal includes forgoing bonuses for 2025 and 2026, the report said.

Earlier this month, Volkswagen CEO Oliver Blume confirmed the need of cost-cutting programme to address “decades of structural problems” within the company.

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However, the IG Metall union has warned of significant conflict if the automaker proceeds with extensive cuts.

In an internal memo, Volkswagen’s board member for human resources acknowledged the union’s openness to addressing labour costs but did not rule out factory closures.

IG Metall lead negotiator Thorsten Groeger cautioned against closures, stating it would result in a conflict with the firm.

Union’s chief negotiator Groeger said: “The Group’s finances are not yet in the red, like they were in crises in the 1970s and 1990s.

“We can see room to take action and make investments to correct the expensive mistakes of the past.”

Potential strikes at Volkswagen’s German sites could begin on 1 December.

The company has indicated that job cuts, including a 10% pay reduction, are necessary for its core VW brand to remain competitive.