by Alimat Aliyeva
The management of German automaker Volkswagen has reportedly
approved plans to end car production at four major plants in
Germany. The decision is part of the company’s wider cost-cutting
strategy as Volkswagen faces growing competition, high production
costs and weaker demand in some European markets.
The information was reported by WirtschaftsWoche (WiWo), which
cited an internal company report obtained by the publication.
Sources inside Volkswagen described the company’s current situation
in dramatic terms, comparing it to the Titanic after it had already
hit an iceberg.
According to the report, production at the Emden and Zwickau
plants is expected to end in 2031, while the Hanover plant could
stop producing cars in 2032. Production at the Neckarsulm plant is
reportedly scheduled to end in 2034.
Volkswagen is considering moving some production to lower-cost
locations in countries such as the Czech Republic, Slovakia and
Poland. However, the German factories could potentially remain open
if the company manages to significantly reduce production
costs.
According to WirtschaftsWoche, Volkswagen currently spends
around €4,900 per vehicle on production in Germany, while the
company’s target is to bring costs much closer to those of its
European facilities. Volkswagen reportedly wants to achieve major
savings by the summer of 2027, although experts believe that
reaching the necessary cost reductions will be extremely
difficult.
As part of its broader restructuring program, Volkswagen also
plans to save tens of billions of euros. The company is considering
major changes to its brand portfolio, including reducing its
involvement in some businesses and selling stakes in hundreds of
subsidiaries. Among the assets that could potentially be affected
are Ducati and Traton. The company is also considering ending
production of the Porsche Taycan electric sports car from 2030 and
reducing the number of management positions by several
thousand.
The situation highlights the serious challenges facing Europe’s
traditional car industry. Volkswagen is under pressure not only
from high labor and energy costs but also from the rapid growth of
Chinese automakers and the expensive transition to electric
vehicles.
On August 24, Bloomberg reported that Volkswagen was considering
job cuts that could affect up to 140,000 positions. Volkswagen CEO
Oliver Blume has previously said that the company needs to reduce
its European production capacity by more than 500,000 vehicles per
year.
Blume has not officially announced the closure of specific
German factories, but he has repeatedly warned that Volkswagen’s
production facilities in Germany are significantly more expensive
than those of many competitors.
Interestingly, Volkswagen is one of Germany’s largest industrial
employers, so the possible closures could have consequences far
beyond the company itself. Entire cities and local economies depend
heavily on Volkswagen factories and their network of suppliers. If
the plans go ahead, the restructuring could become one of the
biggest changes in the history of Germany’s automotive
industry.
For Volkswagen, the challenge is to become more competitive
without losing its position as one of Europe’s most important car
manufacturers. The coming years will show whether the company can
successfully reduce costs while at the same time investing enough
in electric vehicles and new technologies to compete in the rapidly
changing global car market.