For the primary time ever, Volkswagen plans to close the doorways to a facility on its residence turf. The corporate plans to shut not one however not less than three crops in Germany because it faces mounting stress from China. Volkswagen additionally warned mass layoffs and pay cuts are coming because it appears to chop prices.
Volkswagen plans layoffs, plant closures in Germany
It’s been virtually a yr since Volkswagen broke the information that it was contemplating closing its first plant in Germany in its 87-year historical past.
CEO Oliver Blume instructed staff {that a} three-decade-old job safety pledge was in danger. The pledge was carried out to guard VW staff and forestall layoffs by way of 2029.
The announcement got here as Germany’s largest automaker’s market share and earnings slipped in Europe. A yr later, the state of affairs has worsened.
The corporate is now warning that a number of German crops are prone to closing. As well as, Volkswagen mentioned mass layoffs and pay cuts are coming in its residence market.
Daniela Cavallo, head of Volkswagen’s works council (by way of FT), introduced the corporate plans to shut not less than three German crops, reduce hundreds of jobs, and slash pay by 10%. In keeping with a spokesperson from the work council, the at-risk crops embody the ten that primarily provide VW model autos.
Though Cavallo didn’t specify which crops are in danger, an Automotive Information Europe report earlier this month urged VW’s state-of-the-art Audiu plant in Brussels, the place the Q8 E-Tron is constructed, was deemed basically nugatory amid falling demand.
Mounting stress from low-cost EVs
Like its German rivals, Volkswagen is dealing with mounting stress from low-cost Chinese language automakers like BYD.
After dominating its residence market, BYD is seeking to maintain development abroad in key markets like Europe, Southeast Asia, and Latin America.
BYD is already squeezing VW and different international automakers out of its residence market with ultra-affordable electrical fashions, like its Seagull EV, which begins at underneath $10,000 (69,900 yuan) in China.
With new fashions, just like the mid-size Sealion 7 electrical SUV, launching in Europe, BYD continues difficult legacy automakers on their residence turf.
With market share slipping at residence and overseas, VW is dealing with falling earnings, forcing it to chop spending and shrink its intensive manufacturing community to regain competitiveness.
Volkswagen’s world deliveries had been down 3% to six.52 million models by way of the primary 9 months of 2024.
Though VW gained market share in North (+7%) and South America (+15%), a “aggressive state of affairs” in China (-10%) and Western Europe (-1%) offset the expansion. In its residence market, Volkswagen’s deliveries fell 1.6%.
We are going to study extra about Volkswagen’s monetary state of affairs, with Q3 earnings due out on Wednesday. Porsche gave a glimpse after saying that third-quarter earnings slipped 41% on Friday. The posh model’s deliveries are down 41% by way of September.
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