Volkswagen (VOWG_p.DE) has announced that it may be forced to shut down plants in Germany as part of its broader strategy to achieve significant cost savings. The car manufacturer is looking to cut several billion euros from its budget at its flagship brand amid ongoing financial pressures.
According to Volkswagen, one major vehicle production facility and one component factory in Germany have been deemed redundant. This potential restructuring has provoked strong opposition from the company’s works council, which has promised to mount “fierce resistance” against the proposed closures.
In addition to the plant closures, Volkswagen is discontinuing its long-standing job security program, which has been in effect since 1994. This program previously guaranteed no job cuts until 2029, but the company now cites the need for more flexible measures in response to current financial challenges. All proposed changes will be negotiated with the works council.
VW brand chief Thomas Schaefer commented on the situation, emphasizing the severity of the financial strain. “The situation is extremely tense and cannot be resolved through mere cost-cutting measures,” he said in a statement.
This move is part of a larger cost-cutting initiative aimed at saving 10 billion euros ($11.07 billion) by 2026. The Volkswagen brand, a key contributor to the company’s sales, is the first of the group’s divisions to implement such extensive budgetary reductions as the automaker adjusts to the demands of transitioning to electric vehicles.