If the idea comes to fruition, it will be the automaker’s first closure in its home country since it was founded 87 years ago.
THE Volkswagen announced on Monday (September 2, 2024) that it is considering closing two factories in Germany. If the action goes through, it will be the automaker’s first closures in its home country in its 87-year history.
Initially, the automaker said it was considering closing “at least one larger vehicle factory and one component factory in Germany”. According to Oliver Blume, CEO of Volkswagen, “the situation is extremely tense and cannot be resolved through simple cost-cutting measures”.
The company’s goal is to save 10 billion euros by 2026. Agreements with unions provided for early retirement of workers, but there would be no layoffs. However, according to Blume, the measure would be “insufficient to achieve the structural adjustments urgently needed for greater competitiveness in the short term”.
Volkswagen said that, like other European automakers, it is finding it difficult to make the transition from combustion engines to electric vehicles in a sustainable way, considering competition with China.
“The European automotive industry is in a very demanding and serious situation. Germany in particular, as a manufacturing location, is falling further and further behind in terms of competitiveness. In this environment, we as a company must now act decisively.”, said the company leader.
Volkswagen’s share of its biggest Chinese market has shrunk as domestic rivals have rolled out affordable electric cars.
Chinese brands are also spreading across Europe. In response, the EU (European Union) has announced tariffs on imports of electric cars from China that reach 37.6%. The bloc argues that state subsidies make competition unfair.
At the same time, Germany’s economy has been struggling for the past two years, impacting the automobile industry, which needs investment to manufacture electric cars.
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