Volkswagen warns staff it has ‘a year, maybe two’ to adapt to lower demand

Volkswagen (VW) has “a year, maybe two” to resize and adapt to lower sales in its home region, Europe’s largest carmaker has warned, as its plans to close factories in Germany faced fierce resistance from workers and politicians.
Speaking at a meeting with employees at the company’s Wolfsburg headquarters, VW’s finance chief Arno Antlitz said the drastic measures including job cuts announced this week were necessary as the company did not expect pre-Covid demand for cars to return in Europe.
The company turning back on a promise not to cut jobs in Germany before 2029 comes at a time when VW expects to sell roughly 500,000 fewer cars in Europe per year, compared with pre-pandemic, “the equivalent of around two [car production] plants”, he said.
The European car industry is facing a painful transformation to electric vehicles, a technology that has seen the region’s auto companies lose market share to Tesla and Chinese EV-focused brands.
The future of German carmakers has become a growing concern for Berlin, which has seen its large industrial base struggle amid higher energy prices and generous subsidies offered in the US and China.
The drastic plans — VW has in its 87-year history never closed a plant in Germany — has sparked anger from the company’s influential works council, which holds half of supervisory board seats.
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Daniela Cavallo, its chair, on Wednesday accused VW’s management of having failed to address the sprawling group’s notorious bureaucracy, which she said was holding back Germany’s largest private employer from developing the right products and technology to compete amid growing competition.
“We need to reduce our complexity; we need to tackle our obsession with rules; we need to stop our documentation madness,” she said, adding that “all of this is a task for management”.
As she warned management not to further “damage” the works council’s trust, she said the future of VW’s German plants was a matter of interest to Lower Saxony — the state that holds 20 per cent of VW voting rights — as well as the country as a whole.
These views were echoed by the prime minister of Lower Saxony, Stephan Weil, who on Monday said he did not support plans to close factories, stressing that other options were available. Deputy chancellor Robert Habeck on Tuesday warned VW that it had a responsibility towards its 300,000 workers in the country. – Copyright The Financial Times Limited 2024