I=6, VW brand
IG Metal Union is willing to make concessions amounting to €1.5 billion, below Volkswagen’s target of €4 billion, industrial action in December remains high
-
IG Metal Union says Volkswagen brand workers are willing to make concessions amounting to 1.5 billion euros in the ongoing negotiations with Volkswagen.
-
The union said anything beyond that will lead to far-reaching conflict with the carmaker.
-
Volkswagen is looking to save 4 billion euros in its measures that are subject to the negotiations.
-
Tomorrow’s next round of negotiation is likely to mark the last negotiation given that an agreement to refrain from industrial action will expire on November 30.
-
Volkswagen CFO Arno Antlitz said in Q3 2024 earnings call that they are seeking a significant benefit from the negotiations with the labor unions.
“But only I can say we need to make sure that the compromise we find will be significant. So that Volkswagen can achieve the 6.5% margin and can go – move into a profitable and successful future”, he said. " But of course, I cannot rule out strike."
Assessment
Given the large difference between Volkswagen’s number and that of IG Metal, I think the possibility of a strike in December is high. Based on 2023 production numbers, a strike will lead to a daily output loss of around 7,600 units. This assumes that Porsche and Audi workers will also participate in the strike and all plants will be affected. Recently, Porsche workers participated in IG Metal’s industrial actions. My guess is that Volkswagen will tolerate the strike for a few days (maybe 10 days) before reconvening the negotiations and offering a better offer. That will lead to an headwind of around 76,000 units in the month of December.