Volkswagen says cost cuts are urgently needed as its earnings decline sharply

BERLIN (AP) — Volkswagen mentioned important price cuts are urgently wanted because it reported a steep decline in third-quarter earnings on Wednesday and confronted worker representatives offended at the potential for the automaker’s first plant closures in Germany.

The corporate reported internet revenue of 1.58 billion euros ($1.7 billion) for the July-September interval, a 64% decline from the 4.35 billion euros it earned a 12 months earlier. Income was solely marginally decrease, slipping 0.5% to 78.49 billion euros.

The figures got here two days after the top of Volkswagen’s works council mentioned administration had knowledgeable worker representatives that it needs to shut not less than three crops in Germany. The corporate hasn’t publicly detailed its plans.

Volkswagen mentioned in early September that auto trade headwinds imply it could possibly’t rule out plant closures in its dwelling nation, and should drop a job safety pledge in drive since 1994 that will have barred layoffs by 2029.

It cited components together with new rivals coming into European markets and economically stagnant Germany’s deteriorating place as a producing location. European automakers are going through elevated competitors from cheap Chinese language electrical vehicles.

The most recent outcomes “reveal the pressing want for motion in a risky setting characterised by intense competitors,” chief monetary officer Arno Antlitz mentioned. “That is why we face necessary and painful selections that we have to make collectively and to bear collectively.”

“We’ve not forgotten find out how to construct nice vehicles, however the prices — particularly in our German operations and factories — are removed from being aggressive,” Antlitz mentioned. “That is why issues can’t proceed as they’re now.”

Citing the confidentiality of talks with worker and union representatives, he mentioned he wouldn’t remark particularly on plans or “speculations.”

A second spherical of these talks was held Wednesday at Volkswagen’s Wolfsburg headquarters.

Thorsten Gröger, the regional chief of the IG Metall industrial union, mentioned forward of the assembly that the corporate should “not less than declare its readiness to enter a negotiating course of with us that has the purpose of creating alternate options to plant closures and layoffs.”

In any other case, he famous {that a} no-strike obligation below the final wage take care of Volkswagen expires Dec. 1.

After the talks, Gröger mentioned the negotiations not less than didn’t instantly fail, however that calls for corresponding to a ten% wage reduce had been unacceptable and there was no phrase but on what contribution senior managers and shareholders would make to reaching financial savings.

The pinnacle of the worker council, Daniela Cavallo, mentioned that “we aren’t ready to speak about labor price targets in isolation; we wish to work out a grasp plan, a future plan for the corporate collectively through which plant closures and layoffs are dominated out.”

Volkswagen has some 120,000 workers in Germany, the place it has 10 crops — six of them within the northern state of Decrease Saxony, together with Wolfsburg.