Volkswagen shares jump in early trade on turnaround agreement

Shares in Volkswagen were up 7% in early trade in Frankfurt after the supervisory board of Europe's largest automaker ‌late on Thursday struck a major turnaround agreementthat averted an escalation with ‌unions and shareholder Lower Saxony. The deal on the biggest restructuring in the group's 89-year history includes a further 50,000 job cuts, bringing the group's total to 100,000, and leaves open ⁠the future ​of four ⁠of its German plants.

Management, outnumbered by unions and Lower Saxony on the supervisory board, had considered ⁠calling a shareholder meeting to push through its demand, which would have been an unprecedented ​escalation of stakeholder conflict at the carmaker. "The agreement ... is a positive sign ⁠for Volkswagen and the capital market – even if it involves severe cutbacks amongst the workforce and ⁠within ​the group," said Moritz Kronenberger of Volkswagen shareholder Union Investment.

"The ball is now entirely in the Executive Board's court. There are no more ⁠excuses," he said. The turnaround prospects come as Volkswagen faces pressure from U.S. import ⁠tariffs, a stagnant ⁠European market as well as aggressive Chinese rivals that have all gnawed at the group's operating margin, which stood ‌at a ‌mere 3.8% in the first half.

(Editing ​by Ludwig Burger)