The entire European automotive sector is experiencing a severe crisis, with Germany being particularly affected. In this context, Volkswagen is evaluating a reduction in vehicle production across Europe, a strategy that may include the closure of a couple of factories in Germany, potentially leading to layoffs—a scenario the company has never faced before. The goal is to bridge a financial gap of 4-5 billion euros in the Volkswagen and VW Commercial Vehicles divisions.
Volkswagen is also reportedly considering withdrawing from the labor security agreement established in 1994, which was set to last until 2029. This means that early retirement schemes or severance packages may no longer suffice for gradually reducing the workforce. The company's works council reacted strongly, accusing management of undermining the very core of the VW brand and vowing "fierce resistance." On September 4, 2024, a workers' meeting was held at the large Wolfsburg plant, with at least 16,000 participants, according to the works council. The government of Lower Saxony, a Volkswagen shareholder, also called for avoiding layoffs.
Although it is still unclear where VW intends to make cuts, it is believed that facilities in Lower Saxony, such as those in Wolfsburg, Hanover, and Emden, are untouchable. The plants in Zwickau, Dresden, and Kassel, however, are considered more at risk. The estimation of two factory closures stems from a statement by Chief Financial Officer Arno Antlitz, who noted that the automaker has lost sales for approximately half a million vehicles, a volume equivalent to the output of two factories.
The potential downsizing of European production would also have a significant impact on the logistics related to the Volkswagen Group, both in terms of component supply and vehicle delivery. There are no estimates yet in this regard, but Volkswagen could close some platforms and revise contracts with storage and transportation suppliers, including international ones. Italy would also be affected, as it supplies components for the construction of the Group’s vehicles.
