VW Group has said that it is invoking the ‘reopener clause of the collective bargaining agreement for the future’ as it addresses an ‘extremely challenging’ industry situation.

Volkswagen AG and labour union IG Metall have met in Hanover for ‘initial negotiations’ in the context of VW’s aim to ‘systematically implement the previously agreed measures and fully exhaust all options for a socially responsible headcount reduction’.

VW said that ‘in light of the current economic challenges, Volkswagen AG has also given formal notice to terminate several collective agreements, effective December 31, 2026’. These agreements cover wages.

However, the ‘collective bargaining agreement for the future’ – including its job security provisions (until the end of 2030) – is expressly excluded from these measures, VW said. The collective agreements remain in effect in accordance with statutory requirements, which means that nothing will change for Volkswagen AG employees ‘for the time being’, the company said. 

In a statement VW set out the background. It said the automotive industry is currently undergoing the ‘most profound transformation in its history’. Citing geopolitical tensions, trade barriers and increasing competition, primarily from China, it said the pressures are impacting the entire sector and ‘have significantly exacerbated the financial situation of Volkswagen AG in recent years’.

VW’s latest efforts to contain its wage bill in the midst of a radical restructuring drive are likely to meet strong opposition from the IG Metall labour union, which has described VW’s management actions as a ‘war on the workforce’. Strikes are possible from January, some observers have said – although VW will be hoping for more negotiations to ease tensions.

VW said its previous agreement with IG Metall expressly contemplates the reopener clause being invoked if there have been significant changes in the assumptions or economic conditions underlying the agreement of January 1, 2025. Volkswagen AG said it believes this to be the case.

The company’s objective is to systematically implement the previously agreed measures and ‘fully exhaust all other options for a socially responsible headcount reduction’.

Arne Meiswinkel, Chief Human Resources Officer of the Volkswagen brand and member of the Extended Executive Committee, said: “In the past 18 months, there has been a massive shift in the economic environment for the automotive industry and thus also for Volkswagen. These market changes are structural in nature and deep-reaching. Among other factors, Chinese manufacturers are increasingly pushing into Europe with competitively priced exports. This has placed enormous pressure on prices and significantly intensified competition. We therefore need to implement the Future Plan’s measures (Group Target Picture 2030) quickly and systematically to boost our competitiveness. Given the news from the automotive sector as a whole, I think everybody understands that we need to act now.”

In light of the ‘extremely tense market environment’, VW said IG Metall’s demand for a 5% pay rise at the upcoming collective bargaining round is 'not compatible with the current situation of the company or the industry'. On the contrary – it is 'even more important than before that Volkswagen reduces its overhead costs' and adjusts them to a competitive level, the company said.

Volkswagen AG said in the statement that is is giving formal notice to terminate several collective agreements, effective December 31, 2026, as the company considers various provisions in these agreements to require adjustment given the current cost pressure. By serving notice on the collective agreements, the company is creating negotiating space for further discussions, it said.

The collective agreements remain in effect in accordance with statutory requirements, which means that nothing will change for Volkswagen AG employees 'for the time being'. The collective bargaining agreement for the future – including its job security provisions – is expressly excluded from these measures.

Volkswagen AG and IG Metall have agreed to meet for further talks in the second half of October.