After Volkswagen's bombshell announcement earlier this month that it could close factories in Germany for the first time, company management and unions will begin tense talks on a new pay deal Wednesday.
Here are some of the key challenges facing Europe's biggest car maker:
High costs
Volkswagen has repeatedly stressed that its costs are excessive and profit margins too low, particularly at its core VW brand.
Production costs in Germany are "clearly too high", said a leaflet from VW's management distributed to the workforce at several sites in the country ahead of the talks.
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