Volkswagen, Mercedes and BMW are intensifying cost-cutting measures as Germany’s auto industry faces mounting pressure, with labor disputes and electric vehicle market challenges deepening the crisis.

Volkswagen has terminated nearly a dozen collective bargaining agreements, including the Manteltarifvertrag, to enable extended working hours beyond the current 35-hour week, according to Handelsblatt . The move follows a broader push to reduce costs amid competition from Chinese automakers. IG Metall, Germany’s powerful metalworkers’ union, warned that “whoever touches workers’ wages must expect a fight,” raising the prospect of strikes in 2027 .

Mercedes has reintroduced a severance program, offering long-term employees six-figure payouts, while requiring remaining staff to return to offices four days a week and potentially adopt a 38-hour workweek. BMW plans to cut 8,000 jobs globally by the end of 2027, including a 20% reduction in senior management through AI-driven restructuring .

The cost-cutting drive comes as German automakers struggle to match international competitors in the EV market, with BMW’s stock losing over 40% since the start of the year . Volkswagen has also canceled job offers for thousands of workers, signaling further tensions with IG Metall .