Volkswagen Considers Factory Closures

Volkswagen is thinking about closing factories in Germany for the first time in its 87-year history. This decision comes as the company faces increased competition from Chinese electric vehicle makers.

In a statement on Monday, Volkswagen mentioned that it might have to close plants in its home country. The company is also looking at ending an employment protection agreement with labor unions that has been in place since 1994.

Serious Economic Challenges

Volkswagen Group CEO, Oliver Blume, highlighted the tough economic environment. He noted that the European automotive industry, especially in Germany, is facing significant challenges in staying competitive.

Struggles in China

Volkswagen has been losing market share in China, its largest market. In the first half of this year, its deliveries in China dropped by 7%, and its operating profit fell by 11.4%.

Chinese electric vehicle brands, like BYD, are becoming a serious threat to Volkswagen. These brands are not only challenging Volkswagen in China but also in Europe.

Focus on Cost Cutting

Volkswagen’s CEO emphasized that the company is focusing on cutting costs to stay competitive. This includes reducing expenses related to factories, the supply chain, and labor.

Resistance from Labor Unions

Volkswagen’s cost-cutting plans are expected to face strong opposition from labor unions. These unions have significant influence on the company’s supervisory board, which appoints executives.

IG Metall, a powerful German union, criticized Volkswagen’s management for its current problems. The union has vowed to protect jobs and fight against the company’s plans.

Concerns Over Job Security

The union’s lead negotiator, Thorsten Groeger, called the company’s plans irresponsible and dangerous. He warned that these changes could destroy the core of Volkswagen and put many jobs at risk.

Commitment to Germany

Despite the challenges, Volkswagen’s CEO for passenger cars, Thomas Schaefer, said the company remains committed to Germany as a business location. He mentioned that the company would discuss with employee representatives how to restructure the brand sustainably.