Volkswagen cuts manager bonuses by 10% for two years, plans further cuts

Volkswagen won’t sell any of its German factories despite drastic cost cuts

A few days ago, Volkswagen and Germany’s IG Metall union reached an agreement on cost-saving measures that will reduce more than 35,000 jobs nationwide by 2030. The cuts are expected to save the company 1.5 billion euros ($1.5 billion) in annual labor costs. While the layoffs are a blow to employees, the impact will also be felt by about 4,000 managers, who will face significant pay cuts as part of cost-saving efforts.

German sources said managers will forgo bonuses equivalent to 10% of revenue in 2025 and 2026. Over the next three years – 2027, 2028 and 2029 – bonuses will be further reduced by 8%, 6% and 5%, respectively. By 2030, VW hopes to have its financial situation under control and not require further salary cuts.

READ: Volkswagen confirms more than 35,000 job cuts in Germany, Golf production moved to Mexico

“Management and the board have to be part of the solution, which is what the employees have been demanding from the beginning,” a representative of the IG Metall union told NTV.

VW has been eager in recent months to make job cuts it believes will secure its long-term future, rather than just focusing on short-term solutions and cost-saving measures. Volkswagen will not only cut wages and lay off employees, but also cut production capacity in Germany by 734,000 vehicles.

Changes will be felt across Volkswagen’s production network. The Wolfsburg plant will be responsible for production of the ID.3 and Cupra Born, while production of the Golf and Golf Estate will be moved to Mexico in 2027. Volkswagen’s Emden plant will continue to produce the ID.4 and ID.7, while the Osnabrück plant will produce the ID.4 and ID.7. Production of the T-Roc Cabrio will end in mid-2027. Volkswagen has pledged to keep the plant open but is still exploring its best options.

Production at Volkswagen’s Dresden plant will also end next year, but it will also be retained and available as part of a “third-party program”.

Volkswagen Group CEO Oliver Blume said of the sweeping changes: “This agreement is an important signal for the future viability of the Volkswagen brand, Volkswagen Commercial Vehicles and parts plants. “With the package of measures that have been agreed upon, the company has set a decisive course for its future in terms of costs, capacity and structure. We are now back in a position to successfully shape our destiny.”