Workers at Volkswagen factories in Germany will strike from Monday over the carmaker’s plans to lay off thousands of people, cut pay and close plants for the first time in its home country.

Announcing that “warning strikes”, which usually last a few hours, will begin at all VW plants, Thorsten Gröger, the union IG Metall’s lead negotiator with VW, said: “If need be, it will be the toughest collective bargaining battle Volkswagen has ever seen.”

The union leader accused VW managers of making the situation worse: “Volkswagen has set fire to our collective agreements,” Gröger said.

VW’s plans to close at least three plants – the first domestic closures in the company’s 87-year history – lay off thousands of workers and cut pay by 10% has led to a bitter dispute with the union and works council.

The VW Group, which includes Audi and Porsche, is Germany’s biggest employer, with nearly 300,000 employees in the country, of which about 120,000 are covered by a collective bargaining agreement.

In a statement on Sunday, VW said it respected the right of employees to take part in a warning strike and had taken steps to minimise the impact.

The troubles for Europe’s largest carmaker are an unpromising backdrop for Chancellor Olaf Scholz, who triggered snap elections last month when he fired his finance minister, ending Germany’s fractious three-way coalition government.

Germans will vote on 23 February in an election tipped to make the opposition centre-right CDU/CSU alliance the largest group at the expense of Scholz’s Social Democrats. Campaigning in the unusual winter election is unfolding against a backdrop of crisis in Germany’s hi-tech manufacturing sector and troubles for the traditional stalwarts of German industry, carmakers.

VW is struggling with weak consumer demand, the cost of switching from the internal combustion engine to electric vehicles and intense competition from China. The company has cited slack EV sales as a key reason for a deep cost-cutting drive.

VW managers have said the “worsening economic situation” requires “a fundamental restructuring”, citing the falling demand for cars in Europe, plus higher costs of labour, energy and raw materials.

The union and works council have put forward plans they say could save €1.5bn in labour costs without the need for factory closures. The plans include forfeiting future pay rises in exchange for shorter working hours at some plants, and waiving bonuses for executives and staff.

Volkswagen responded that while the measures could help in the short term, they would not lead “to any long-term financial relief for the company in the coming years”.

IG Metall said it was an “extremely regrettable” response, accusing the company of “ignoring the constructive proposals of the employee representatives”. The union has warned of a “hot winter” of strikes.

The crisis for Europe’s biggest carmaker is emblematic of problems for the industry across the continent. Last week, the head of the European Commission, Ursula von der Leyen, announced she would lead “a strategic dialogue” on the future of the European car industry. She is facing pressure from centre-right allies and the far right to scrap or weaken green targets for carmakers.

Carmakers say they are struggling to fund investment to switch production from petrol and diesel to electric vehicles, just as demand for battery-powered cars is stalling. At the same time, EV manufacturers in China – accused by the EU of being aided by “unfair” state subsidies – are increasing their market share.

VW announced in October that its profits had fallen by nearly 60% amid a slump in sales in China. VW remains profitable, but earnings before tax dropped almost 60% to €2.4bn (£2bn) in the quarter from July to September, down from €5.8bn a year earlier.