Volkswacht Bodensee - Tens of thousands strike at Volkswagen's Germany plants

Waving signs reading "You want war, we are ready!" and the red flags of the powerful IG Metall Union, employees at plants across the country walked out over management plans to make huge cuts.

VW has been hit hard by high manufacturing costs at home, a stuttering shift to electric vehicles and tough competition in key market China.

The VW group -- which owns 10 brands from Audi and Porsche to Skoda and Seat -- said it "respects workers' rights" and believes in "constructive dialogue" in a bid to reach "a lasting solution that is collectively supported".

It also said that it had taken "measures to guarantee urgent deliveries" during the strike action.

IG Metall and the works council have fought to protect jobs since VW announced in September that it was weighing the unprecedented step of shutting some plants in Germany, where it has around 120,000 employees.

Thousands of workers marched alongside a line of new electric cars leaving the Zwickau plant as part of the industrial action, with walkouts also observed at plants from Hanover to VW's historic headquarters of Wolfsburg.

"That those at the top make the mistakes and we have to pay the price, that annoys me," striking worker Michael Wendt told AFP, wearing a scarf in union colours.

- 'Toughest wage dispute' -

To the sound of cheering crowds, blaring horns and banging drums, works council chief Daniela Cavallo told a rally that VW's bosses were seeking to "sell out Germany as an industrial location" and strip employees of their rights.

But she said the "Volkswagen family" was united and had "huge stamina" to fight a drawn-out industrial dispute.

IG Metall announced at the weekend that industrial action would get underway Monday with a series of "warning strikes", which are short walkouts, after the company had last week rejected the union's proposals for protecting jobs.

Some 66,000 VW employees participated in the strike action on Monday, according to IG Metall, with stoppages set to extend into the early hours of Tuesday morning as some workers on the night shift down tools.

Union negotiator Thorsten Groeger has however warned that the strikes could escalate into "the toughest wage dispute Volkswagen has ever seen".

He charged that "Volkswagen has set fire to our collective bargaining agreements" and that the company board was now "throwing open petrol drums into it".

"What follows now is the conflict that Volkswagen brought about. We did not want it, but we will conduct it with all the dedication necessary."

- Clouded outlook -

Labour representatives say VW wants to close at least three plants in Germany and axe tens of thousands of jobs, with remaining workers facing 10 percent pay cuts.

The crisis at the German industrial titan comes as the eurozone's top economy struggles, and amid heightened political uncertainty with elections looming in February.

Volkswagen's perilous financial position was highlighted in October when it reported a 64 percent plunge in third-quarter profit to 1.58 billion euros ($1.7 billion).

Slowing business in China, where homegrown rivals are outselling the German carmaker, has been a particularly heavy blow.

VW cited "economic reasons" last week when it announced the sale of its operations in China's Xinjiang, though the company had also been under pressure to exit the northwestern region due to human rights concerns.

Further clouding the outlook is an EU move to impose hefty tariffs on Chinese-made electric cars, which VW fears could trigger retaliatory steps.

Its woes reflect a broader crisis in the European auto industry, with demand weak and the transition to electric cars slower than expected.

In Germany, VW, BMW and Mercedes-Benz have all downgraded their profit forecasts recently while key suppliers to the industry have been announcing job cuts.

K.Sutter--VB