Volkswagen to shut 3 German plants, cut jobs and slash wages

Drastic cost-savings drive highlights extent of the crisis at Europe's biggest automaker

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BERLIN - Volkswagen plans to close at least three factories in Germany, eliminate thousands of jobs and slash wages for tens of thousands of German workers in a drastic cost-savings drive as Europe's biggest automaker tries to halt its tailspin.

The proposals to fix the struggling VW brand represent unprecedented cuts and underscore the extent of the crisis at Volkswagen. The German manufacturer has never closed a factory in its home country and a plan to reduce salaries by 10 per cent could affect some 140,000 workers there.

Following weeks of tensions, after Volkswagen cancelled a job guarantee agreement this summer, some 25,000 workers rallied at the company's headquarters in Wolfsburg on Oct 28.

Ms Daniela Cavallo, the head of Volkswagen's powerful work council, announced the carmaker's proposal at the assembly to try and galvanise resistance. Negotiations have been ongoing for weeks, but the severity of the planned cuts being sought was not previously clear.

VW's employees are worried that the cuts are just the beginning of plans to downsize the carmaker's operations in Germany, which is struggling with relatively high energy and labour costs. The moves would be another blow for Europe's largest economy, which is expected to contract in 2024 for the second straight year.