Volkswagen Announces Historic Social Plan in Germany
The largest European car manufacturer and top employer in the German industry plans to close three sites, resulting in the elimination of tens of thousands of jobs.
For the first time in its history, the German giant founded in 1937 may close several factories on its own territory. This drastic cost-cutting plan includes salary reductions and massive layoffs. The former global leader in the automotive industry seems to be paying the price for its transition to electrification, a strategy that is still struggling to take hold in Europe and, even more so, in China.
Just a year ago, Volkswagen adopted a €10 billion cost-cutting plan in agreement with its unions, but this appears to be insufficient. The decline in production in Europe is a long-term trend, and China, once a very lucrative market for German manufacturers, is slowing down.
Bernard Jullien, an expert in the automotive industry, explains that the profits made in China, which equaled European volumes and were more profitable, had until now compensated for the high costs in Germany. With this revenue source declining, Volkswagen's results are plummeting.
After the Dieselgate scandal, Volkswagen chose to heavily invest in electric vehicles to restore its image, an ambitious strategy that is facing challenges in Europe and struggling to generate returns in China.
"The ID.3 is not convincing like the Golf was... So, it's not the case in Europe, and it's even less so in China... Since in China, there are manufacturers born to make electric vehicles like Nio or Xpeng," explains Bernard Jullien.
The dialogue is expected to be tense between management and unions: negotiations resume this Wednesday, but employees will not be able to consider a strike, which is now likely, before December 1st.
Source: Europe 1
