Volkswagen Considers Historic Plant Closures in Germany for First Time in 87 Years Due to Sales Slump

Sep 4, 2024, 07:06 AM

Volkswagen is considering unprecedented factory closures in Germany for the first time in its 87-year history due to a significant downturn in car sales, particularly in electric vehicles (EVs). The company has announced the potential end of its no-layoffs pledge, which has been in place since 1994 and prevents job cuts until 2029, as it faces intense competition from Chinese automakers and a challenging economic environment. CEO Oliver Blume highlighted the 'extremely tense' situation and emphasized the need for decisive action. The closures could affect factories in Lower Saxony and Hesse. Volkswagen's CFO, Arno Antlitz, noted that the company has a shortfall of demand for around 500,000 cars, equivalent to two plants, and stressed the necessity to increase productivity and reduce costs. He also mentioned that the industry-wide demand in Europe is 2 million cars below peak levels. The IG Metall union has vowed to resist the closures, with union leaders asserting that management has failed to address the issues adequately. The situation underscores the broader struggles of the European automotive industry to compete with Asian rivals and adapt to the EV market.