Volkswagen is facing a massive crisis. According to the latest reports, the company is planning to cut 100,000 jobs around the world. This is a large part of their 657,000 total employees. This plan is twice as big as what they announced before, and it is part of a new „survival plan“ created by the company's leaders. Reports say that four factories are in danger, including plants in Hannover, Emden, Zwickau, and the Audi factory in Neckarsulm. According to the plan, production at these locations might stop completely once the current car models are finished.
VW’s difficult financial situation is caused by several factors. German factories cannot compete with cheaper production costs in other countries, and there is a decline in demand for some car models; for example, the electric car ID.Buzz is not selling as well as expected. Furthermore, the crisis in the Chinese market is a major problem. In the past, profits from China helped pay for the high costs of German factories, but now, because of strong local competition, these profits have dropped significantly. Labor unions called this decision an „irresponsible threat.“ They reminded the company about an agreement that protects employees from forced layoffs and factory closures, except for Osnabrück, until 2030.
On July 9, the plan will be presented to the VW supervisory board. The situation is very difficult. Representatives of the Lower Saxony state government, who have important votes on the board, say that closing factories is a simple and unacceptable solution to the problem. However, Volkswagen’s leadership insists that their current business model designing cars in Germany and building them in Europe is no longer efficient. The company believes that a „total transformation“ is necessary to stay competitive in the global market.