Volkswagen Plans Closure Of Three Factories, Job Cuts Loom: Report

Volkswagen AG VWAGY, is reportedly planning the closure of at least three factories, which will lead to job losses and wage reductions for tens of thousands of employees in Germany.

These proposals aim to address the challenges faced by the struggling brand, reported Bloomberg.

Although discussions have been ongoing for several weeks, the full scale of the intended cuts was not previously apparent.

Negotiations between management and labor have yet to yield any outcomes. The report further noted that a grace period will expire next month, after which warning strikes at VW locations in Germany could commence as early as December 1.

Read: Volkswagen’s $5B Deal With Rivian Leaves Software Arm Cariad Workers Frustrated, CEO Left Out: Report

Importantly, Volkswagen has never shut down a factory in its home country, and a proposal to lower salaries by 10% could impact around 140,000 workers, the report noted.

VW employees fear these cuts may signal the start of broader downsizing efforts at the automaker’s German operations, which are grappling with high energy and labor costs.

Notably, Volkswagen is merely a reflection of a struggling European auto industry that is currently challenged on many fronts, with its struggles being both the global competition and its declining appeal. 

Recently, the European Commission planned to propose final tariffs of up to 35.3% on electric vehicles manufactured in China, in addition to the standard 10% car import duty applied by the EU, which could impact the company’s CUPRA brand that is an electric vehicle manufactured in China and designed in Spain. 

Volkswagen delivered 189,400 all-electric vehicles in the three months through the end of September, marking a drop of about 10% from the corresponding period last year.

Also, in September, Volkswagen cut its annual outlook, citing a challenging market environment to global deliveries of around 9 million, down from the 9.24 million delivered last year. The company had previously said that it expects a rise of up to 3%.

Moreover, last month, the company’s PowerCo battery subsidiary decided to run a Salzgitter plant in Germany at half capacity by erecting only one of two planned production lines. This decision comes in the wake of financial pressures and a dip in the demand for electric vehicles

Photo by multitel on Shutterstock

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