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Fifth round of talks between VW management, unions

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Talks paused after 13 hours, unclear if deal is possible

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Collapse of talks would mean 'unprecedented' strike action

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VW shares down 2.5%, Porsche SE shares down 2.9%

(Adds that talks paused until mid-morning, in paragraph 2)

By Victoria Waldersee

HANOVER, Germany, Dec 16 (Reuters) - Volkswagen

management and labour representatives negotiated

late into the night on Monday in a last-ditch round of talks on

cost cuts before Christmas, with unions saying it remained far

from clear whether compromise would be reached.

Talks ended after around 13 hours of negotiation in the

early hours on Tuesday without a deal but would resume

mid-morning, a spokesperson for IG Metall union said.

The sides were far apart on key points, with unions adamant

that any solution must exclude plant closures and the carmaker

insisting it cannot rule them out.

"It was far from clear late on Monday evening whether

rapprochement or a stalemate were a realistic outcome of the

talks on Tuesday," the IG Metall union said in a statement

published to its website.

Unions have threatened unprecedented strike action in the

new year if a compromise is not found in this week's talks,

which both sides have said could last several days.

"Workers don't want to go into Christmas in fear," she told

union members outside the hotel before talks began early on

Monday, the fifth round since early September.

Europe's biggest carmakers are being squeezed by high costs

and the arrival of cheaper Chinese competitors which are taking

the battle for market share to their home turf.

Unions blame poor decisions by management for Volkswagen's

malaise, from the diesel emissions scandal to not investing

earlier in affordable EV technology.

Volkswagen, Europe's biggest carmaker, has seen its share

price fall by more than a third over the past 12 months,

reflecting the sprawling German group's difficulties in tackling

rising rivals and a slowdown in EV demand.

The carmaker, like others across Europe, is struggling with

overcapacity in high-cost markets squeezing margins and

persistently lower sales. VW has said it does not expect car

sales, down by around 2 million in Europe since the pandemic, to

fully recover, and it must adapt.

More than 100,000 staff at nine plants across Germany downed

tools last week in the largest strikes at the carmaker,

protesting against management's stance that wages must be cut

and capacity downsized for the VW brand to stay competitive.

In a sign of the depth of Volkswagen's problems, its top

shareholder Porsche SE on Friday said it may have to

write down the value of its 31.9% stake by as much as 20 billion

euros ($21 billion).

This is mainly due to the delay in Volkswagen's annual

planning round as a direct consequence of the prolonged talks

with unions, Stifel analysts said in a note.

Such a writedown would still assume a book value for

Volkswagen shares that is more than twice as high as its current

market price, they added.

Shares in Porsche SE, which serves as the investment vehicle

of the Porsche and Piech families and also holds a 12.5% stake

in the namesake carmaker, were down 2.9%.

($1 = 0.9527 euros)