In the dispute over the future of Volkswagen, Group CEO Oliver Blume has reaffirmed the need for massive cost reductions.

"The current situation is serious," he said on Wednesday at the works meeting at VW's main plant in Wolfsburg, referring to high competitive and price pressure. Labor costs in Germany are now too high. "Our products are good, now we have to reduce costs - in all areas." The aim is to find a sustainable solution in negotiations with the works council. The employee representatives' proposal for savings is a good start, "but unfortunately it is not nearly enough to defend the future of Volkswagen."

Head of the Works Council Daniela Cavallo explained that the workforce was not responsible for Volkswagen's problems, but was prepared to make concessions. "And that is why a solution involving plant closures, mass redundancies and cuts in monthly pay is still out of the question," she told thousands of VW employees. At the same time, in the presence of Labor Minister Hubertus Heil (SPD), she called on politicians to stimulate the economy and thus help VW in the automotive crisis.

Europe's largest car manufacturer wants to cut costs due to falling sales and profits. In the current wage negotiations, VW is therefore demanding a ten percent pay cut and is threatening layoffs and the closure of plants in Germany for the first time. The works council and IG Metall want to prevent this. This week, almost 100,000 VW employees across Germany have already gone on warning strikes.

(Report by Ilona Wissenbach, edited by Myria Mildenberger. If you have any queries, please contact the editorial team at frankfurt.newsroom@thomsonreuters.com)