Volkswagen Announces Unprecedented Factory Closures in Germany as Part of Billion-Dollar Cost-Cutting (Akhil Simha / Unsplash)
Volkswagen plans to close up to three factories in Germany for the first time in its history, as part of a restructuring aimed at cutting more than $4.3 billion in costs.
Facing an economic slowdown in Europe, declining sales in China, and competition from Chinese automotive imports, the company is seeking alternatives to curb expenses. The Golf R and GTI models, manufactured in Wolfsburg and sold in the U.S., may be impacted by the closures, raising concerns among enthusiasts and consumers in North America.
The decision to close factories is part of a broader cost-saving plan, which includes a 10% pay cut for all employees and a freeze on salary increases for two years. However, production costs in Germany are high, and Volkswagen is facing challenges in maintaining profitability while competing globally.
Labor unions, which have significant influence within the company, have already suggested possible strikes to pressure against the cuts. The situation is exacerbated by the disparity in labor costs between factories in Germany, where the average salary is $80,000, and in Mexico, where employees earn an average of $20,000.
With the impact of the impending changes, unions may initiate actions in December to protect jobs in Germany. Volkswagen has already revised its forecasts for 2024, and the third-quarter financial results, which are set to be released soon, are expected to reinforce a challenging scenario for the automaker.
Source: Car and Driver | Photo: Unsplash | This content was created with the help of AI and reviewed by the editorial team
