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Volkswagen has concluded its restructuring talks with unions, resulting in a victory for labor organizations. However, the company’s share price remains unaffected by the outcome.
According to reports, Volkswagen had planned to close three German factories as part of its efforts to address efficiency shortfalls and improve profitability. The move was intended to address weaker markets at home and in China, as well as floundering electric vehicle sales and lagging profits at its VW brand.
However, union leaders have declared the talks a “Christmas miracle” after reaching an agreement that will not involve immediate factory closures or layoffs. Instead, job cuts will be achieved through early retirement and natural attrition.
The deal has been met with skepticism by some investment researchers. Jefferies Investment Research described the deal as requiring more details to assess its impact on the company’s performance. The organization noted that the planned €15 billion ($16.4 billion) in efficiency gains falls short of what is needed to match the pace of change in the industry.
Bernstein Research also expressed disappointment, stating that the agreement fails to deliver on management’s cost reduction ambitions. According to Bernstein, wage levels in 2026 will be between 4-7% lower than if no changes had been made, which falls short of the 16-19% reduction sought by management.
While the deal may have staved off potential industrial action, Jefferies notes that the agreement is unlikely to impress investors. “A near-term benefit from the Agreement should be to avoid potentially crippling strikes in January,” the organization stated.
On the other hand, some analysts believe that the unions have emerged victorious. Frank Schwope, an automotive industry lecturer at the University of Applied Sciences FHM Hannover, suggested that the agreement is a success from the employees’ point of view, despite lacking transparency on details.
The outcome has had no discernible impact on Volkswagen’s share price, which remained steady throughout the negotiations and subsequent announcement. Despite the uncertainty surrounding the agreement’s financial implications, investors may be waiting for further clarity before making any significant decisions.
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Source: www.forbes.com
