Volkswagen Group is offering early retirement packages to all 2,300 workers at its two manufacturing facilities in India as part of a broader operational restructuring in the world's third-largest automotive market, Reuters reported.
The German automaker, which operates Volkswagen, Skoda, Audi, Porsche, Lamborghini and Bentley brands in India, currently holds just 2% market share despite maintaining a presence in the country for over two decades, according to Reuters.
The voluntary early retirement scheme aims to "rationalise the manpower and align it with current needs," a source familiar with the matter told Reuters. The initiative comes as both factories operate below their installed production capacities.
Employees accepting the offer will receive 75 days of pay for each year served or each year remaining until retirement, whichever amount is lower, sources said. Workers who sign up within five to 10 days will receive an additional payout, the sources added.
Skoda Auto Volkswagen, which has overseen the group's India strategy since 2018, confirmed the scheme was introduced at the request of worker unions. The company stated that its restructuring program is designed to strengthen operations while "reaffirming our long-term commitment to India."
The restructuring occurs alongside a significant challenge for the automaker: India has issued a $1.4 billion import tax demand, alleging the company evaded levies, Reuters reported. Volkswagen has denied these claims.
Klaus Zellmer, CEO of Skoda, has emphasized the importance of growth in India, particularly as the brand has reduced its presence in China and exited Russia entirely.
Both Volkswagen facilities are located in Maharashtra state, where the company produces vehicles including the Skoda Kushaq SUV, Volkswagen Virtus sedan, and Audi Q3 and Q5 models for domestic sales and export to markets including Mexico and South Africa.
The company is currently seeking a local partner as it finalizes plans for its next phase of investment in India, according to Reuters.