Both plants in Maharashtra are operating below capacity, and the voluntary scheme, supported by worker unions, provides financial incentives based on years of service.Volkswagen Group is offering early retirement to all of its 2,300 workers across its two factories in India, sources said, as the automaker seeks to overcome obstacles to growth in the world’s third-largest car market.
Volkswagen Group has embarked on a broader restructuring in India, where it is contesting the country’s biggest import tax demand yet of $1.4 billion for allegedly evading levies. It has denied the claims.
The group, which sells its Volkswagen, Skoda, Audi, Porsche, Lamborghini and Bentley brands in India, has only 2 per cent market share in India despite more than two decades of operations.
Klaus Zellmer, CEO of Skoda, in particular has spoken of the need for growth in India as the brand no longer has a big presence in China and has exited Russia.
Factories are running below capcity
Both of Volkswagen’s factories in India are running below their installed production capacities.
The group has introduced an early retirement scheme for its blue-collar workers to “rationalise the manpower and align it with current needs,” one of the two sources told Reuters.
The source said the company wanted to ensure it could continue to pay competitive wages and that the plants would continue to operate.
Both sources declined to be named because of the sensitivity of the matter.
Skoda Auto Volkswagen, which has been leading the group’s India strategy since 2018 and is seeking a local partner as it seeks to finalise the next stage of investment in the country, said the early retirement scheme is voluntary and was introduced at the request of worker unions.
Meanwhile, the company’s restructuring programme is designed to strengthen its business, “reaffirming our long-term commitment to India,” Skoda said in a statement.
The scheme offers employees 75 days of pay for each year served or each year remaining until retirement – whichever is lower, the sources said, adding that those who sign up within five to 10 days will get an additional payout.
Both factories are located in India’s western Maharashtra state where the company manufactures cars including the Skoda Kushaq SUV, Volkswagen Virtus sedan and the Audi Q3 and Q5 for sale in India and export to markets such as Mexico and South Africa
