Volkswagen Will Close Three German Factories in Cost-Cutting Efforts

by Chris Teague

Published: October 28th, 2024

volkswagen will close three german factories in cost cutting efforts

A short while ago, Volkswagen said that it could close some of its German factories to cut costs. The move would be the automaker’s first closure in its home country, and we now have confirmation that VW plans to shutter three of its German factories, which will impact tens of thousands of workers.

Volkswagen’s labor council head, Daniela Cavallo, told employees, “Management is absolutely serious about all this. This is not saber-rattling in the collective bargaining round. This is the plan of Germany’s largest industrial group to start the sell-off in its home country of Germany.” Cavallo did not detail which facilities and employees would be impacted.

The automaker is facing waning demand in Europe and fierce competition from Chinese companies, leading it to pursue a restructuring plan to cut costs. VW said it would offer cost-cutting proposals by October 30, which is when it will release third-quarter financial results.

VW board member Gunnar Kilian reinforced the seriousness of the situation, saying that without cutbacks, the automaker would not have the funds it needs to invest in future vehicle and technology development. He also said the German factories were running above budget and underperforming, making some locations up to twice as expensive as other companies’ facilities.

Workers at VW’s German plants halted production in protest of the announcements. The automaker’s goal of saving up to $4.3 billion also involves a ten-percent wage decrease and a two-year wage freeze. Company management is reportedly considering a cap on bonuses for the higher-ups and may cut benefits for employee anniversaries.

[Images: VW]

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Chris Teague

Chris grew up in, under, and around cars, but took the long way around to becoming an automotive writer. After a career in technology consulting and a trip through business school, Chris began writing about the automotive industry as a way to reconnect with his passion and get behind the wheel of a new car every week. He focuses on taking complex industry stories and making them digestible by any reader. Just don’t expect him to stay away from high-mileage Porsches.

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2 of 31 comments

Paul on Oct 31, 2024
Interesting that even those high costs they have trouble producing a good product. I know it's anecdotal but my friends have been quite disappointed with theirs especially the electrical systems and transmissions.

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Glennbk on Nov 01, 2024
VW needs to lay everything out for the union. They need to be a part of the decision as much as anyone else. There may be a third option that neither side has thought of.

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