Volkswagen is set to close at least three factories in Germany and cut tens of thousands of jobs as part of a significant cost-saving initiative, marking the first domestic plant closures in the company’s 87-year history. This drastic restructuring is a response to increasing competition, particularly from China, and declining sales in major markets, compounded by the costly transition to electric vehicles.
“Management is absolutely serious about all this. This is not sabre-rattling in the collective bargaining round,” Daniela Cavallo, Volkswagen’s works council head, told employees at the company plant in Wolfsburg. “This is the plan of Germany’s largest industrial group to start the sell-off in its home country of Germany.”
The proposal also includes a 10% pay cut for all employees of the VW brand.
The company has issued a second profit warning in three months, indicating a challenging market environment. Union resistance is expected as discussions continue, with Cavallo hinting at potential strikes if management does not reverse its plans. Additionally, the announcement follows the controversial deportation of Volkswagen’s chief marketing officer for China, Jochen Sengpiehl, due to drug-related issues.
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