VW faces union retaliation threat over wage agreement termination plans

The brewing fight comes as Chinese rivals sharpen their focus on the European market, piling pressure on costly German manufacturing sites, with Mercedes-Benz also threatening two plant closures. Volkswagen could terminate parts of VW's system of collective bargaining agreements, including an umbrella wage agreement covering some 100,000 workers at its main German plants, although a landmark 2024 deal is not up for debate, according to sources involved in the talks. This could force renegotiation of certain labour standards as Volkswagen aims to drastically reduce costs.

The move marks an escalation in Volkswagen's row with labour representatives over the most radical restructuring in the group's history, including tens of thousands more layoffs and the closure of up to four German production sites. Group CEO Oliver Blume now faces union anger over how he plans to push through the cuts. Volkswagen last cancelled parts of its collective bargaining framework with the union in September 2024, triggering a wave of strikes that culminated in a landmark labour deal for 35,000 job cuts in return for guarantees. That deal is now under threat from the planned ramp-up of redundancies and production cuts, according to labour representatives.