Volkswagen is reportedly set to make sweeping changes to its operations in Germany, with potential closures of three manufacturing plants and tens of thousands of job losses.
Facing high costs, declining demand and intensified competition from Chinese manufacturers, the automotive giant is implementing cost-cutting measures that could reshape its European workforce.
The potential plant closures in Germany bring to light Volkswagen's decision to restructure amid a turbulent market.
The company's works council has confirmed the possible closure of multiple plants, hinting at significant layoffs to follow. Daniela Cavallo, head of the Volkswagen works council, said, "Management is absolutely serious about all this. This is not sabre-rattling in the collective bargaining round." Cavallo suggested these closures could signal the beginning of a broader "sell-off" in Germany.
Reports indicate that beyond layoffs, Volkswagen plans to reduce wages by at least 10%, with pay freezes forecasted through 2025 and 2026.
The restructuring plan reflects a stark shift as the company moves to combat rising operational costs while attempting to sustain its competitive edge in Europe.
Volkswagen's challenges are further exacerbated by growing competition from Chinese automakers like BYD, who have rapidly gained ground in Europe.
CEO Oliver Blume highlighted the pressure from new competitors and Germany's waning competitiveness, noting, "Germany, in particular, as a manufacturing location is falling further behind." His comments came following a reported 11% drop in the company’s operating profit for the first half of the year, compounded by declining sales.
While most attention is on Germany, reports suggest Volkswagen’s Brussels plant may also face downsizing as Audi considers halting production of the Q8 e-tron due to falling demand.
This move casts uncertainty over the plant’s future, as Volkswagen has reportedly struggled to find a buyer despite interest from over two dozen parties.
Additional details on the company’s plans are anticipated later this week, providing further insights into VW's strategic response to Europe’s increasingly challenging playing field.