Volkswagen’s management, Europe’s largest automaker, may close at least one factory in Germany for the first time in 87 years as part of cost-cutting measures. The company is also reconsidering its commitment to avoiding layoffs until 2029.
“The automotive industry in Europe is in a very serious and difficult situation,” said Oliver Blume, CEO of Volkswagen Group. “The economic environment has become even tougher, and new competitors are entering the European market. Specifically, Germany has fallen behind in industrial competitiveness.”
The company points to increased competition from China, particularly in electric vehicles, as a major factor. Chinese firms like BYD are reducing Volkswagen’s sales in China and threatening the European market.
Volkswagen employs nearly 683,000 people worldwide, with about 295,000 of them based in Germany.
These plans are expected to face resistance from employees, who hold more than half of the seats on the company’s supervisory board, responsible for appointing top executives. IG Metall, one of Germany’s largest unions, has criticized poor management for the company’s issues and vowed to fight to protect jobs.
Volkswagen’s difficulties and potential impact add to the challenges for Olaf Scholz’s government [1], [2] , coming shortly after regional elections in Germany, where his party’s ratings declined.
