Volkswagen Doesn't Rule Out German Plant Closures in Cost-Saving Drive

By Mauro Orru

Volkswagen could consider closures of its vehicle production and component factories in Germany to cut costs as the car maker faces increasingly stiff competition.

The group said all of its brands needed a comprehensive restructuring to keep factory, labor, product and material costs in check amid fierce competition in Europe both from local rivals as well as Chinese car makers.

"The European automotive industry is in a very demanding and serious situation," Chief Executive Oliver Blume said in a statement. "The economic environment became even tougher, and new competitors are entering the European market."

Meanwhile, Germany is falling further behind in terms of competitiveness as a manufacturing hub and Volkswagen needs to rein in costs, Blume added. The group said plant closures could no longer be ruled out as simple cost-cutting measures wouldn't be enough to address the challenges Volkswagen is facing.

Thomas Schaefer, head of the group's flagship brand, said the company wanted to launch discussions with workers' representatives to explore how to restructure the brand.

Trade union IG Metall said Volkswagen's executive board was questioning German plants, in-house collective wage agreements and a job security program running until the end of 2029 at management meetings on Monday.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

September 02, 2024 11:28 ET (15:28 GMT)

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