Volkswagen, one of the world’s most iconic car manufacturers, is considering closing factories in Germany for the first time in its 87-year history. This unprecedented move could reshape the company’s long-standing legacy as it grapples with fierce competition from electric vehicle makers and struggles to maintain its foothold in a challenging market.
The automaker has acknowledged that closing plants in Germany is a possibility amid increasing competition from Chinese electric vehicle makers. Volkswagen Group CEO Oliver Blume stated that the European automotive industry is facing severe challenges, with new rivals entering the market and Germany falling behind in competitiveness.
In the first half of the year, Volkswagen experienced a 7% drop in deliveries in China, its largest market, and an 11% decline in group operating profit. The company is facing stiff competition from local EV brands like BYD, affecting its performance in both China and Europe. While closing factories could potentially save money, it would also lead to job losses for many workers.
Trade unions, including IG Metall, have strongly criticized the potential factory closures, accusing Volkswagen of mismanagement and threatening jobs. A union spokesperson said that German factory closures would “destroy the heart of Volkswagen.” Additionally, Volkswagen is seeking to terminate an employment protection contract with labor unions that has been in place since 1994 as part of its cost-cutting plan.
Despite the turmoil, Volkswagen’s CEO for passenger cars emphasized the company’s commitment to Germany as a business location. He urged for urgent talks with employee representatives to explore sustainable restructuring options. Volkswagen employs nearly 683,000 people worldwide, with about 300,000 in Germany. The company stresses that addressing the current situation requires more than just cost cuts and will need “comprehensive restructuring.”
