The proposed closures would affect Volkswagen’s main passenger car division and other group operations, setting the stage for a possible confrontation with Germany’s powerful unions, Bloomberg reported.
Volkswagen Group CEO Oliver Blume highlighted the growing difficulties facing the company, saying that “the economic environment has become even tougher and new players are entering Europe,” adding that Germany’s competitiveness as a business location is declining.
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According to the report, Volkswagen has long struggled to improve profitability in its passenger car segment, where margins have been consistently low. These challenges have been exacerbated by the slow pace of the company’s transition to electric vehicles (EVs) and a decline in consumer spending.
To address these issues, Volkswagen is considering closing at least one major car manufacturing plant and one component plant in Germany. In addition, the company is considering scrapping existing wage agreements.
Volkswagen works council chief Daniela Cavallo has criticised the company’s management, accusing it of failing to prevent the core brand, responsible for models such as the Golf and Tiguan, from sliding into unprofitability.
Volkswagen employs around 650,000 people worldwide, of whom almost 300,000 are in Germany. The company’s supervisory board is evenly split between employee representatives and other stakeholders, and the German state of Lower Saxony, which owns a 20% stake in Volkswagen, often sides with union interests.
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