Azernews.Az

by Alimat Aliyeva

The management of German automaker Volkswagen has reportedly approved plans to end car production at four major plants in Germany. The decision is part of the company’s wider cost-cutting strategy as Volkswagen faces growing competition, high production costs and weaker demand in some European markets.

The information was reported by WirtschaftsWoche (WiWo), which cited an internal company report obtained by the publication. Sources inside Volkswagen described the company’s current situation in dramatic terms, comparing it to the Titanic after it had already hit an iceberg.

According to the report, production at the Emden and Zwickau plants is expected to end in 2031, while the Hanover plant could stop producing cars in 2032. Production at the Neckarsulm plant is reportedly scheduled to end in 2034.

Volkswagen is considering moving some production to lower-cost locations in countries such as the Czech Republic, Slovakia and Poland. However, the German factories could potentially remain open if the company manages to significantly reduce production costs.

According to WirtschaftsWoche, Volkswagen currently spends around €4,900 per vehicle on production in Germany, while the company’s target is to bring costs much closer to those of its European facilities. Volkswagen reportedly wants to achieve major savings by the summer of 2027, although experts believe that reaching the necessary cost reductions will be extremely difficult.

As part of its broader restructuring program, Volkswagen also plans to save tens of billions of euros. The company is considering major changes to its brand portfolio, including reducing its involvement in some businesses and selling stakes in hundreds of subsidiaries. Among the assets that could potentially be affected are Ducati and Traton. The company is also considering ending production of the Porsche Taycan electric sports car from 2030 and reducing the number of management positions by several thousand.

The situation highlights the serious challenges facing Europe’s traditional car industry. Volkswagen is under pressure not only from high labor and energy costs but also from the rapid growth of Chinese automakers and the expensive transition to electric vehicles.

On August 24, Bloomberg reported that Volkswagen was considering job cuts that could affect up to 140,000 positions. Volkswagen CEO Oliver Blume has previously said that the company needs to reduce its European production capacity by more than 500,000 vehicles per year.

Blume has not officially announced the closure of specific German factories, but he has repeatedly warned that Volkswagen’s production facilities in Germany are significantly more expensive than those of many competitors.

Interestingly, Volkswagen is one of Germany’s largest industrial employers, so the possible closures could have consequences far beyond the company itself. Entire cities and local economies depend heavily on Volkswagen factories and their network of suppliers. If the plans go ahead, the restructuring could become one of the biggest changes in the history of Germany’s automotive industry.

For Volkswagen, the challenge is to become more competitive without losing its position as one of Europe’s most important car manufacturers. The coming years will show whether the company can successfully reduce costs while at the same time investing enough in electric vehicles and new technologies to compete in the rapidly changing global car market.