SHERIDAN, WYOMING -- July 10, 2026 -- Automotive economist Ferdinand Dudenhöffer has called for Volkswagen to abandon its 35-hour work week and return to a 40-hour standard without wage compensation, as the German automaker faces declining sales and considers closing four plants. The founder of the CAR Institute made the recommendation in an interview with Neue Osnabrücker Zeitung, arguing that higher production costs could be partially addressed through extended working hours similar to discussions currently underway at Mercedes-Benz. Volkswagen reported a nearly 9 percent drop in vehicle sales during the second quarter of 2026, with the company's supervisory board meeting Thursday to discuss restructuring plans that could eliminate more than 100,000 positions.
Labor Policy Changes Proposed to Address Production Cost Challenges
Dudenhöffer's proposal targets labor agreements that have defined German automotive manufacturing for decades. He advocates suspending collective bargaining autonomy temporarily to enable cost reductions. The economist argues that workforce concessions are necessary for the sector to remain competitive. His position comes as Volkswagen's supervisory board failed to reach agreement on restructuring measures during its recent session, leaving workers, customers, and investors without clarity on the company's direction.
The 35-hour work week has been a cornerstone of labor agreements in German automotive manufacturing. Extending hours without additional compensation would effectively reduce per-unit labor costs. Similar discussions at Mercedes-Benz suggest the proposal reflects broader industry pressure to adjust labor structures in response to market conditions.
Recovery Timeline Extends Five to Seven Years Despite Current Pressures
The automotive economist projects a potential industry recovery within five to seven years, characterizing the intervening period as difficult for both manufacturers and their supply chains. This timeline suggests extended operational challenges for companies dependent on automotive sector demand. Dudenhöffer's forecast provides a planning horizon for stakeholders evaluating long-term commitments to the German automotive industry.
Short-term outlook remains constrained. Volkswagen's second-quarter sales decline follows a pattern of reduced demand across multiple markets. The company's inability to finalize restructuring decisions during its supervisory board meeting extends uncertainty that affects procurement planning, workforce retention, and capital allocation decisions.
Skoda Brand Demonstrates Competitive Product Development Capability Within VW Group
Dudenhöffer points to Skoda's performance as evidence that Volkswagen Group possesses the technical capability to produce competitive vehicles. The Czech brand's success with advanced, market-ready products contradicts claims that German automakers have fallen behind in product development. This assessment suggests operational challenges stem from cost structures and market conditions rather than engineering deficiencies.
The economist rejects characterizations of German automakers as having missed critical industry transitions. He notes that Volkswagen was the first European manufacturer to invest in a dedicated electric vehicle production facility. This investment history indicates strategic awareness of electrification trends, though market adoption has not matched initial projections.
Policy Instability Cited as Primary Factor in Investment Challenges
Regulatory framework changes receive primary blame for industry difficulties in Dudenhöffer's analysis. He argues that shifting government policies have undermined long-term industrial investment planning. The economist contends that manufacturers cannot effectively deploy capital when regulatory requirements change repeatedly. This critique addresses a structural challenge beyond individual company control.
The assessment challenges narratives that attribute German automotive struggles solely to management decisions or product strategy failures. Instead, it frames current difficulties as resulting from external policy volatility that complicates multi-year investment commitments required for automotive manufacturing. This perspective has implications for how industry stakeholders evaluate risk in future capital deployment.
Volkswagen Supervisory Board Fails to Resolve Restructuring Plans
The supervisory board meeting on Thursday concluded without finalizing measures to address the company's operational challenges. Proposals under consideration include closing four manufacturing facilities and reducing headcount by more than 100,000 positions. The scale of potential workforce reductions would affect multiple regions and supply chain partners dependent on Volkswagen production volumes.
Dudenhöffer criticized the board's inability to reach decisions, noting that continued uncertainty damages relationships with all stakeholder groups. Customers face questions about product availability and warranty support. Employees cannot plan for career stability. Capital providers lack visibility into return timelines. The delay extends a period of operational ambiguity that complicates business planning across the automotive value chain.
Second Quarter Sales Decline Intensifies Pressure for Operational Changes
Volkswagen's second-quarter 2026 sales fell nearly 9 percent compared to the prior year period. The decline affects revenue projections and capacity utilization across the company's manufacturing network. Reduced production volumes increase per-unit fixed costs, compounding the competitive challenges that Dudenhöffer's labor policy recommendations aim to address.
The sales performance adds urgency to restructuring discussions. Lower volumes reduce the company's ability to absorb current cost structures while maintaining price competitiveness. Market conditions show limited signs of near-term improvement, supporting Dudenhöffer's extended recovery timeline and reinforcing pressure for structural adjustments to labor agreements and manufacturing footprint.
For more information about Volkswagen's corporate operations and investor relations, visit the company's official website at https://www.volkswagen.com