Why 20,000 Volkswagen employees have accepted voluntary retirement
What's the story
Volkswagen is planning to lay off 35,000 employees in Germany by the end of this decade. The move is part of a broader cost-cutting strategy, with the German automotive industry facing challenges like the ongoing tariffs imposed by US President Donald Trump. The company hopes to save €1.5 billion annually through these measures, German newspaper Bild has reported. To note, 20,000 employees have already agreed to terminate their contracts early and take voluntary retirement.
Measures
Severance payments and apprenticeship cuts
Volkswagen plans to offer severance payments based on length of service, possibly up to €351,159 per employee. The company also intends to slash the number of apprenticeships offered annually from 1,400 to 600 starting in 2026.
Adjustments
Several employees accept payment freeze
In addition to the voluntary resignations, nearly 130,000 workers in the German automaker's core team have decided to accept a payment freeze. To note, the company is planning a 5% salary hike that will be paid into a fund later in two stages. This will be used to finance flexible working time models among other things.
Worrying
Business climate index for German automotive industry plunges
These measures have helped Volkswagen avoid closing its plants in Germany. The company's cost-cutting strategy comes amid a deteriorating business climate index for the German automotive industry due to US tariffs. Business expectations for May 2025 plunged to -28.3 from -25.2 points in April, while the business climate index fell to -31.8 points from -30.7 the previous month, according to a Reuters report citing Ifo Institute data.