Volkswagen warns of plant closures in Germany, citing ‘extremely tense’ situation

Volkswagen warns of plant closures in Germany, citing ‘extremely tense’ situation


A VW Golf GTI stands in a parking lot within sight of the brand tower on the grounds of the VW plant in Wolfsburg.

Picture Alliance | Picture Alliance | Getty Images

German carmaker Volkswagen on Monday warned it will no longer be able to rule out plant closures in the country, citing the specter of major cost-cutting measures in order to “future-proof” the company.

“The European automotive industry is in a very demanding and serious situation,” Volkswagen Group CEO Oliver Blume said in a statement.

“The economic environment became even tougher, and new competitors are entering the European market. In addition, Germany in particular as a manufacturing location is falling further behind in terms of competitiveness.”

As a result, Volkswagen Group’s chief executive said the company “must now act decisively.”

Shares of Volkswagen traded 2.4% higher on Monday afternoon.

Volkswagen said that brands within the company would need to undergo a “comprehensive restructuring,” before adding that the current situation means that even plant closures at vehicle production and component sites can no longer be ruled out.

The carmaker said it felt compelled to bring an end to its employment protection agreement — a job security program that has been in place since 1994 — in order to secure “urgently needed structural adjustments for greater competitiveness in the short term.”

“The situation is extremely tense and cannot be resolved through simple cost-cutting measures,” VW brand CEO Thomas Schäfer said in the statement.

“This is why we want to initiate discussions with employee representatives as soon as possible to explore the possibilities for sustainably restructuring the brand,” he added.

Volkswagen said all necessary measures would be discussed with the General Works Council and German trade union IG Metall.



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