Volkswagen is facing a major financial crisis, and as it seeks to save $11.1 billion by 2026, closing two factories in Germany—something unprecedented in its 87-year history—is being considered.
The Osnabrück and Dresden plants are the main candidates for closure. The Osnabrück factory currently produces the Porsche 718 Boxster and Cayman, which are nearing the end of their lifecycle, as well as the Volkswagen T-Roc Cabriolet, a niche model in Europe. The Dresden plant, known as the “Transparent Factory,” produces the electric ID.3 model.
Closing these factories would be a drastic measure to cut costs amid an unfavorable economic climate.
In addition to the possible factory closures, Volkswagen is also reconsidering its job security program, which has been in place since 1994 and prevents layoffs until 2029. This is generating strong resistance from unions, especially the influential IG Metall, which has already shown significant power by preventing the layoff of 30,000 Volkswagen employees in Germany in 2022.
Furthermore, the group’s performance in China has drastically declined due to the rise of local automakers like BYD. This shift has affected Volkswagen’s profit margins, which are now at 2.3%, and the company’s stock has dropped by 13% just this year.
The final decision on the future of the German factories is still under discussion, with a meeting scheduled to explore alternatives and try to avoid the closures.
Source: Motor1.com / Quatro Rodas | Photos: Unsplash // Google Maps | This content was created with the help of AI and reviewed by the editorial team.
