Volkswagen Group has introduced an early retirement scheme for all 2,300 workers at its two manufacturing facilities in India as part of a wider operational restructuring. The move comes as the automaker continues to face challenges in the world’s third-largest automotive market, where it holds a 2 percent share despite operating for more than two decades, according to a Reuters report.
According to a report by Reuters, the voluntary retirement programme is intended to rationalise workforce levels amid underutilisation of production capacity at the factories. A source cited in the report said the scheme aims to “rationalise the manpower and align it with current needs,” reflecting the automaker’s efforts to streamline its India operations.
Employees opting for the scheme will receive 75 days of pay for each year of service or each year remaining until retirement, whichever is lower, Reuters reported. Additional incentives will be available to workers who accept the offer within five to 10 days. Skoda Auto Volkswagen, the entity responsible for coordinating the group’s India strategy since 2018, stated that the programme was introduced at the request of worker unions and forms part of a broader restructuring to strengthen operations while reaffirming its long-term commitment to the country.
The restructuring effort coincides with a significant tax dispute. India has issued a USD 1.4 billion import tax demand alleging duty evasion, according to Reuters. Volkswagen has denied the allegations. Klaus Zellmer, Chief Executive Officer of Skoda, has noted the strategic importance of growth in India as the brand reduces its presence in China and completes its exit from Russia.
Both Volkswagen facilities are located in Maharashtra, producing models such as the Skoda Kushaq sport utility vehicle (SUV), Volkswagen Virtus sedan, and Audi Q3 and Q5 vehicles for domestic and export markets including Mexico and South Africa. The group is also in discussions with potential local partners as it finalises plans for its next phase of investment in India, Reuters reported.
Volkswagen Group operates multiple brands in India, including Volkswagen, Skoda, Audi, Porsche, Lamborghini and Bentley.