Volkswagen management intends to cut wages by up to 300 million euros

Investing.com – Volkswagen’s (ETR:) management team is set to take pay cuts amounting to more than 300 million euros by 2030, German newspaper Braunschweiger Zeitung reported on Wednesday, citing comments from a VW human resources board member, Gunnar Kilian.

The newspaper said that the board of directors of the giant automaker will choose to reduce their salaries by a greater percentage compared to management or other employees. Kilian declined to provide further details.

In December, Volkswagen and its unions agreed to reduce the size of the company’s workforce by more than 35,000 jobs – or nearly a quarter of the total number of employees – by 2030. Production capacity at Volkswagen’s German manufacturing facilities will also be reduced by 734 thousand units, although none of its factories will be closed.

However, production at VW’s main Wolfsburg plant will be reduced to two assembly lines of four, and the future of plants in the German cities of Osnabrück and Dresden remains uncertain. The company said it is exploring options for the Dresden site and is considering reusing the Osnabrück plant.

The unions called on Volkswagen’s leadership to agree to pay cuts during negotiations, saying they bear responsibility for VW’s recent problems. The collective wage agreement halted worker increases over the next four years and eliminated or reduced some bonuses.

These steps are expected to help reduce expenses in the medium term by €15 billion annually, including €1.5 billion in labor costs.

German-listed shares in Volkswagen have lost more than 20% of their value over the past year, as the group suffers from slowing demand in Europe and low-cost local competitors in China, the world’s largest car market. The company had previously outlined plans to develop discounted electric vehicles in a bid to counter its Chinese rival, which has grown to threaten Volkswagen’s market share in Europe.

Last May, Volkswagen warned that European automakers had two to three years to build their offerings to compete with their Chinese counterparts, or risk the sector’s survival.

(Reuters contributed reporting.)