The Volkswagen Group is considering closing factories in Germany for the first time in its 87-year history, in a move aimed at dramatically cutting costs in the face of increasing competition for its namesake brand.
The former Karmann plant in Osnabrück, under Volkswagen Group control since 2009, is considered one potential candidate for closure, sources at Volkswagen confirmed to Autocar.
It currently makes the Volkswagen T-Roc Cabriolet, the convertible variant of the group's best selling car, alongside the Porsche 718 Cayman and Porsche 718 Boxster.
Another factory in Dresden, which builds the Volkswagen ID 3, is also said to be under study for closure.
"The situation is extremely tense and cannot be overcome by simple cost-cutting measures," Volkswagen brand CEO Thomas Schäfer said in a statement to German media.
This is part of a wider cost-cutting plan that includes a plan to end the company’s job security program, which has been in place since 1994 and effectively prevents job cuts until 2029, according to the company’s works council.
The council vowed "fierce resistance" to any moves toward job cuts and factory closures, adding: “Volkswagen considers one large vehicle plant and one component factory in Germany to be obsolete.”
The Volkswagen Group, Germany's largest industrial employer and Europe's leading car maker by revenue, is currently in the midst of a cost-cutting drive targeting €10 billion (£8.4bn) in operational savings by 2026, as it attempts to cut spending and increase efficiency in its transition from a predominantly ICE vehicle line-up to an EV line-up.
“A difficult economic environment, new competitors in Europe and the falling competitiveness of the German economy mean Volkswagen needs to do more,” Volkswagen Group CEO Oliver Blume told Reuters.
The powerful German workers' union IG Metall labelled news of potential plant closures an “irresponsible decision that shakes the foundation of Volkswagen”.
Works council chief Daniella Cavallo said in an interview on Volkswagen's intranet that management had made "many wrong decisions" in recent years, including not investing in hybrids or being faster at developing affordable EVs.
Instead of plant closures, the board should focus on reducing complexity and taking advantage of synergies across the Volkswagen Group’s plants, Cavallo said, criticising the company's "documentation madness" and "salami-slicing" tactics.
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