Volkswagen could be planning to shutdown its factories in Germany to curb costs reveal reports. The German premium car manufacturer is one of the largest companies in the world and has a deep rooted automotive history. For the first time in 87 years the brand has moved towards shutting down one of its plants. According to media reports, this could have been due to rising competition from China’s electric vehicle manufacturers.
Reports also reveal that the brand could be planning to terminate an employment protection agreement with labour unions that have been in order since 1994. Reports reveal that the Volkswagen Group CEO Oliver Blume has also commented that this is a very serious situation. Furthermore, he reveals that as the economic environment has become tougher the competitors have started entering the European markets.
Late last year Volkswagen also started its cost cutting effort as the company started losing market share in China. Deliveries to customers in the year tumbled to 7% and its profit shrunk from USD 11.4 Billion to USD 11.2 Billion. Reports further elaborate that this could be the due to the high performing BYD brand which has been posing a risk to European countries.
Volkswagen’s main area of cost cutting is to its factory, supply chain and labor expenses, reveal reports. However, IG Metallic which is Germany;s most powerful unions blame mis management. The cost cutting plans are also likely to face heavy resistance from labour representatives. IG Metall also further commented that the irresponsible planning has shaken the very foundation threatening jobs and locations.
In 2021 Volkswagen Group’s production network comprised of 118 locations worldwide. Out of these 70 plants manufacture cars at the rate of around 40,000 per day. The brand also has a strong global network of 49 manufacturing plants for vehicles and components.
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