Volkswagen to Shut Down 3 German Plants

Volkswagen, one of Europe’s largest automotive manufacturers, has announced plans to close at least three of its plants in Germany as part of a sweeping strategy to reduce costs and improve competitiveness.

Daniela Cavallo, the head of Volkswagen’s labor union and a member of the company’s supervisory board, outlined the plans during a speech in Wolfsburg, emphasizing the need for operational cutbacks and a 10% wage reduction across its core brand.

Cavallo explained that these measures include reducing production volumes, scaling back work shifts, and decreasing assembly lines beyond previous reductions.

She expressed concern over the extensive scale of these changes, suggesting that such drastic reductions risk gradually weakening the company’s foundations.

CEO Oliver Blume highlighted rising costs for the Volkswagen brand amid a weakened demand in Europe, combined with increasing competition from Chinese manufacturers like BYD.

Union representatives criticized management for what they describe as missteps in the transition to electric vehicles and misguided pricing policies, arguing that the company’s workers are bearing the cost of these errors.

Cavallo’s address was part of a series of union-organized meetings across multiple Volkswagen sites, underscoring a week of escalating tensions for Europe’s leading car manufacturer.

The company is expected to report lower sales and profits for the third quarter, adding further strain to an already challenging environment.

Cavallo warned that Volkswagen’s cost-cutting initiatives could jeopardize tens of thousands of German jobs, noting that luxury automaker Porsche has ended its production partnership with Volkswagen’s Osnabrück plant, leaving it without future model plans.

Volkswagen has been under significant pressure since issuing a second profit warning in just three months at the end of September.

Although luxury brands like Audi and Porsche have been the company’s primary profit drivers in recent years, they now face obstacles, with Porsche recently announcing plans to cut costs and reevaluate its product lineup amid declining demand in China, which has impacted profitability.

Negotiations on cost-saving measures remain ongoing, with the deadline for a final agreement set for next month.

However, if no deal is reached, Volkswagen’s workers may initiate warning strikes in Germany as early as December 1, highlighting the potential for further disruptions as the company navigates this critical period of restructuring.