Volkswagen Outpaces Economic Forecasts While Southern European Car Sales Dwindle

Building a Smarter German-American Partnership

This week, Volkswagen (VW) announced wage increases for over 100,000 workers in six of its plants in western Germany. Representatives of IG Metall and upper management of VW reached this agreement in a second round of deliberations on Thursday. In addition to the 4.3% annual wage increase, the company agreed to the trade union’s proposal to provide temporary employees the same wages as permanent workers after nine months of service to the company.

The wage increase of 4.3% for 13 mouths outpaces those of last year (3.2) and should provide encouragement for German automobile manufacturing in this tough economic climate. VW is performing incredibly well this year, widening its profitability over its competitors.  In the first quarter of this year, VW increased its profits by 10% to €3.2 billion, surprising analysts who contended that the company’s high investment in production would yield negative profit margins.

Conversely, production of automobiles lags substantially in many southern European nations. Sales of cars in Italy, Greece, and Spain declined 18%, 57%, and 22%, respectively.

The following articles provide insight into the developments at VW as well as the inconsistent performance of car manufacturing in Europe:

“VW-Belegschaft bekommt 4,3 Prozent mehr” (Financial Times Deutschland)

“Southern Europe Woes Lead Downward Spiral in Region’s Car Sales” (Bloomberg)