Germany faces Volkswagen crisis: Factory closures spark concern

Let's recap: Volkswagen plans to close at least three factories in Germany, lay off tens of thousands of employees, and scale down operations at other facilities in Europe's largest economy.

The German Association of Districts and Municipalities assesses that Volkswagen's crisis could lead to problems in rural areas. "Current events at VW are not only a real shock for all of Germany as a place of business but also especially for companies involved in supplying the automotive industry, most of which operate in rural areas," said the association's chairman, Achim Brötel (CDU), to newspapers in the Funke media group.

He added that the expected cuts at VW are a great concern. "It also concerns many jobs in rural areas, tax revenues, and, most importantly, concrete future prospects for many people and their families," emphasized Brötel.

The dw.com service cites a recent survey conducted between October 30 and November 1 on a representative group of 5,001 people. It shows that many people in Germany are critical of any potential state rescue of VW plants. In the survey conducted by the Civey agency for the web.de news portal, 61% of respondents rejected the idea of state intervention to prevent plant closures, while only 25% were in favor.

Thomas Schaefer, responsible for the Volkswagen brand in the group, which includes Audi, Seat, and Skoda, acknowledged a few days ago that German factories were not productive enough and exceeded target costs by 25-50%. This means some facilities were twice as expensive compared to the competition.

In 2023, the group's profit amounted to over 24 billion dollars. However, according to "Die Zeit," the VW Group is no longer selling as many cars as before the coronavirus pandemic. Moreover, the brand's vehicles are purchased much less frequently than sister brands like Skoda or Cupra, also part of the group.

Volkswagen is selling fewer vehicles with combustion engines, especially in China. There, the transition to e-mobility is progressing significantly faster than in Europe, and the Chinese prefer to buy from domestic manufacturers, partly due to price and better digitalization, as noted by the newspaper.