Volkswagen has given notice to terminate several collective agreements in Germany effective December 31, 2026, as the automaker seeks greater flexibility to reduce costs and implement measures agreed under its restructuring program. The company said the termination does not affect the separate Future Collective Bargaining Agreement or its job-security provisions through the end of 2030.
The move follows Volkswagen and IG Metall invoking a revision clause that allows the parties to reopen their agreement when the economic conditions underlying the January 1, 2025 settlement have changed significantly. Volkswagen said it considers the current market environment sufficiently different to justify the process.
Volkswagen Cites Market Pressure and Rising Costs
Volkswagen pointed to geopolitical tensions, trade barriers and increasing competition, particularly from Chinese manufacturers, as factors that have changed the economic environment for the automotive industry.
Arne Meiswinkel, Chief Human Resources Officer of the Volkswagen brand, said the company needs to implement measures under its Future Plan more quickly and systematically while reducing costs.
“The economic environment has changed dramatically for the automotive industry in general and thus also for Volkswagen over the past 18 months,” Meiswinkel said. “These market changes are structural and profound.”
Volkswagen said the current conditions also mean it cannot support IG Metall’s demand for a 5% pay increase in the upcoming bargaining round, arguing that reducing overhead costs is instead necessary.
Several Collective Agreements Face Termination
Volkswagen has not disclosed the exact number of agreements affected. According to union representatives cited in reports, the terminations include agreements covering collective supplementary remuneration, allowances, the Tarif Plus framework, training and the framework collective agreement.
The framework agreement is particularly significant because it governs fundamental employment conditions, including working time and overtime. However, Volkswagen has not formally proposed changing the existing 35-hour standard in the current negotiations.
The termination itself does not immediately change employees’ conditions. Under German law, the affected collective agreements continue to apply after termination until new arrangements are reached. Volkswagen explicitly said the Future Collective Bargaining Agreement and its employment protections are excluded from the termination.
Job Security Through 2030 Remains in Place
The 2024 agreement between Volkswagen, IG Metall and the works council established extensive measures to reduce labor and structural costs, including a commitment to exclude compulsory redundancies through 2030. The agreement also provided for significant reductions in capacity and a socially responsible workforce reduction.
Volkswagen said its latest action does not alter those job-security provisions. The company also said it intends to pursue additional options for reducing its workforce through socially responsible measures.
The two sides have agreed to continue negotiations in the second half of October, with discussions expected to address the implementation of previously agreed cost measures as well as the next collective bargaining round.
Working Hours Could Become a Negotiating Issue
The current dispute could eventually extend to working hours, although Volkswagen has not made a formal demand to increase the regular working week to 38 or 40 hours.
The issue has gained attention because longer working hours could potentially reduce labor costs per hour if total compensation were adjusted accordingly. For now, however, the company has not presented a specific proposal on this matter.
The upcoming negotiations will take place against a broader dispute over pay, with IG Metall seeking a 5% increase for employees covered by the wider German engineering-sector bargaining round.
German Production Sites Face Longer-Term Uncertainty
The negotiations are also relevant to the future allocation of production at several German facilities. Volkswagen has been restructuring its manufacturing footprint as it adjusts capacity and investment plans.
Sites including Emden, Zwickau and Hannover have been undergoing changes as the company reorganizes production. Zwickau and Emden have been particularly important to Volkswagen’s electric vehicle manufacturing operations.
Volkswagen’s broader Future Plan continues to combine cost reductions, capacity adjustments and investment in new products and technologies. The company has said the transformation is intended to improve its competitiveness while maintaining a long-term industrial presence in Germany.
Volkswagen Deepens Battery Partnerships
At the same time, Volkswagen is continuing to invest in future technologies, including battery production, while increasingly using partnerships to structure capital expenditure.
In September, Volkswagen Group, PowerCo and Gotion announced a deeper strategic partnership involving battery projects in Spain, Slovakia and Morocco. Volkswagen has said such cooperation can help organize investments in cell production more efficiently and limit capital requirements.
The approach reflects Volkswagen’s broader effort to balance investment in electrification with tighter cost controls as the group restructures its operations.
Further negotiations between Volkswagen and IG Metall are scheduled for the second half of October, setting the stage for discussions over labor costs, working conditions and the implementation of the company’s existing restructuring measures.
