Volkswagen shares jump in early trade on turnaround agreement

Volkswagen shares surged 7% in early trading on the Frankfurt stock exchange after the supervisory board reached a major turnaround agreement with unions and the state of Lower Saxony on Thursday evening. The deal, which represents the largest restructuring in the automaker's 89-year history, involves an additional 50,000 job cuts, bringing the total number of positions to be eliminated to 100,000.

The agreement also leaves the fate of four German plants in question. Management had previously contemplated a shareholder meeting to push through their demands, but the agreement alleviates the risk of an escalated conflict among stakeholders. Moritz Kronenberger, from Volkswagen shareholder Union Investment, stated that the agreement is a positive sign for the company and the capital market, despite the significant workforce reductions.

The final decision now lies with the Executive Board, with no more excuses, he added. The turnaround prospects come at a challenging time for Volkswagen, as the company faces pressure from US import tariffs, a stagnant European market, and fierce competition from Chinese automakers. The group's operating margin stood at a mere 3.8% in the first half of the year.