Volkswagen's Wage Strategy Loosens as Braunschweig Ruling and Thin Margins Test the Turnaround
Published on 11/07/2026 at 00:20 | Editorial boerse-global.de
Volkswagen has quietly widened its room for manoeuvre on pay. An internal document drawn up roughly three weeks after an early-October directive now centres on bringing labour costs down to competitive levels — with zero-round settlements kept on the table as one route — rather than demanding that every collective deal through 2030 avoid wage increases outright. The earlier instruction to personnel chiefs worldwide had also targeted bonuses, special payments and allowances for cuts. The revised version makes no mention of variable compensation. Volkswagen declined to comment on the change, citing the confidentiality of internal papers, according to a Spiegel report published today.
The works council welcomed the adjustment, a signal that the softer line may land better with employees — provided the concrete measures actually use the flexibility it opens up. What matters economically is the cost relief ultimately achieved. By shifting emphasis from individual pay instruments to a target cost level, the group has bought itself room to negotiate.
A Court Ruling Adds a Legal Bill
The same day brought a separate charge. Braunschweig's labour court ordered Volkswagen to pay roughly EUR 300,000 in back salary to a dismissed manager, covering about a year, and rejected the company's claim for reimbursement of legal fees. Volkswagen said it will review the decision and may appeal, leaving the handling of the ruling among its open legal items. Against a day's share price move of -2.6%, the payout itself is small; the wider question for investors is whether the operating earnings base can carry a recovery once one-off burdens fade.
That base looks thin. For January to September 2026, Volkswagen reported operating profit of EUR 0.1 billion, down from EUR 5.4 billion a year earlier. Special items totalled EUR 8.7 billion, and before those effects operating profit came in at EUR 8.8 billion — the gap that frames the whole debate. A rebound is plausible only if the charges recede and the underlying business holds its ground.
Guidance for the full year 2026 points to revenue of around EUR 315 billion and an operating return on sales of up to 1%. The company had originally targeted 4–5.5%. Restructuring costs, weakness in China and tough competition are weighing on the business, compounded by US tariffs and soft demand.
Should investors sell immediately? Or is it worth buying Volkswagen?
JPMorgan Trims Its Target
JPMorgan cut its price target for the preference shares from EUR 110 to EUR 85 on 30 October, after quarterly figures and the earnings call, keeping a "Neutral" rating. Analyst Jose M. Asumendi factored in substantial write-downs and special items — a reminder that such charges can keep capping the valuation. Fresh impairments or one-off charges could again mask operating progress, and the low margin forecast makes the question of how much profit Volkswagen can report after all burdens especially pressing.
An existing piece of the overhaul covers the German sites: an agreement from December 2024 provides for 35,000 job cuts by 2030, alongside a reduction in German production capacity.
Elli Retreats From Charging Hardware
One concrete lever sits at the Elli subsidiary, which is scaling back its own charging-hardware business, as n-tv reported on Tuesday. Digital charging services, fleet solutions and energy management are to move centre stage; talks with employee representatives are under way. If the focus on selected offerings pays off economically, the retreat would form part of a sharper set of priorities — though until those talks conclude, the potential earnings contribution is best treated as a scenario.
The bull case therefore rests on several conditions at once: special charges must shrink, the operating business must stay stable, and restructurings such as Elli's must deliver. Meet them, and investors could increasingly look past the charges to the pre-exceptional earnings base. Fail, and the thesis weakens.
Emden Talks Set the Next Marker
The next fixed date is the start of wage negotiations with IG Metall on 24 November in Emden, with a continuation scheduled for 15 December in Zwickau. Investors can track what the two sides aim for and what financial obligations may follow. More legal payment duties would also hit reported profit if the rulings stand.
For the investment case, what counts is how operating performance, restructuring costs and special items interact. A credible recovery would require improvements in the business to reach shareholders after all those burdens — and that is the yardstick by which the new, more flexible cost line must be judged.
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