Volkswagen (VW), Europe’s leading automobile manufacturer, has cautioned that it might have to downsize and adjust to reduced sales within its base market – Europe. This was announced amongst protests by workers and politicians against the proposed closure of German plants. VW’s financial head, Arno Antlitz, addressed these concerns at a company meeting in Wolfsburg, stating that significant steps, including workforce reductions, must be taken since the automotive demand pre-Covid is unlikely to resume in Europe.
VW’s plan to reverse its commitment to job security in Germany until 2029 is due to an anticipated decline in yearly European car sales by roughly 500,000 compared to pre-pandemic times, which Antlitz likened to “the equivalent of about two [car production] factories”.
Europe’s automobile industry is currently struggling with a challenging shift toward electric vehicles. This new technology has driven European brands to lose market shares to Tesla and Chinese manufacturers specialising in electric vehicles. This transformation has sparked anxieties over the fate of German automotive firms, especially with Berlin observing struggles in its massive industrial sector due to rising energy costs and competing against substantial subsidies from the US and China.
VW’s drastic strategies – marking the first time in the company’s 87-year history to close a German factory – have incited fury from the powerful works council, occupying half of the supervisory board seats. The chair of the council, Daniela Cavallo, criticised VW’s management on Wednesday, accusing them of neglecting to address infamous bureaucratic issues, preventing Germany’s top private employer from devising apt products and technology to combat fierce competition.
Cavallo made a plea to simplify internal procedures, curb overreliance on regulations, and pull back on excessive documentation, laying the responsibility on the management. She also warned against further damaging the trust of the works council and emphasised the national and regional interest in the future of VW’s German factories.
Lower Saxony Prime Minister Stephan Weil and Deputy Chancellor Robert Habeck resonated with Cavallo’s sentiments. Weil expressed his disapproval for factory closures on Monday, affirming that alternative solutions were accessible. Habeck reminded VW of its duty to its 300,000-country-wide workforce on Tuesday.