Investing.com – Volkswagen’s ( ETR: ) management team is set to take pay cuts of up to more than 300 million euros by 2030, German newspaper Braunschweiger Zeitung reported on Wednesday, citing comments from VW human resources board member Gunnar Kilian.
The board of directors of the car manufacturing giant would decide to reduce their salaries by a larger proportion compared to other members of the board or staff, the newspaper said. Kilian declined to give further details.
In December, VW and its unions agreed to cut the size of the company’s workforce by more than 35,000 jobs – or about a quarter of its total workforce – by 2030. The capacity of VW’s German manufacturing plants would also be reduced by 734,000 units, although none of its plants would not be closed.
However, production at VW’s key factory in Wolfsburg will be cut to two production lines from four, and the future of factories in the German cities of Osnabrueck and Dresden remained uncertain. The company said it is exploring options for the Dresden location and is considering repurposing the factory in Osnabrueck.
Unions have called on VW management to agree to pay cuts during negotiations, saying they are to blame for VW’s recent problems. The collective agreement halted wage increases for workers for the next four years and eliminated or reduced some bonuses.
The moves are expected to help cut costs in the medium term by 15 billion euros a year, including 1.5 billion in labor costs.
VW’s German-listed shares have fallen more than 20% in the past year as the group struggles with weak demand in Europe and cheap domestic rivals in China, the world’s biggest car market. The company has previously unveiled plans to develop cheaper electric vehicles in a bid to tackle Chinese competition, which has grown and is even threatening VW’s market share in Europe.
Last May, VW warned that European carmakers had between two and three years to build their offerings to compete with Chinese rivals or risk the survival of the sector.
(Reuters contributed reporting.)
