Volkswagen to Shut German Plants, Cut Thousands of Jobs in Major Revamp

Volkswagen is planning a major restructuring of its operations in Germany, which includes shutting down at least three factories, cutting tens of thousands of jobs, and downsizing its remaining plants. The announcement marks a significant shift for Europe’s largest automaker as it grapples with rising costs and weaker demand in both China and Europe.

Daniela Cavallo, head of Volkswagen’s works council, delivered the news to hundreds of workers at the company’s main plant in Wolfsburg, saying that management is “absolutely serious” about the overhaul. She warned that this is not mere posturing but a concrete plan by Germany’s largest industrial group to downsize its domestic operations.

While Volkswagen has been in ongoing negotiations with unions for weeks, this is the first time the carmaker has openly discussed the potential closure of its German plants, which could impact a significant portion of its 300,000 employees in the country.

The company released a statement stressing that these measures are crucial for its long-term competitiveness, stating, “This is the only way to finance further investments in the future from our own resources.”

Cavallo called on the German government to urgently devise a comprehensive strategy for the country’s industry, warning that without decisive action, German manufacturing could face a bleak future. She criticized the government’s inaction as the economy remains weak, with Germany now facing a second year of contraction. Chancellor Olaf Scholz’s government is under pressure to stimulate growth, especially with federal elections looming next year.

The chancellor’s office acknowledged Volkswagen’s struggles and emphasized that past management errors should not come at the expense of workers. A spokesperson reiterated that the government is in close dialogue with the company, aiming to safeguard jobs.

Despite consensus between workers and management on the challenges facing the company—including the slow transition to electric vehicles and intense competition from Chinese automakers—Cavallo said there remains a stark divide on how to solve these issues.

Volkswagen’s announcement follows similar moves by other German automakers. Last week, Mercedes-Benz revealed plans to ramp up its cost-cutting efforts after seeing profits decline, while Porsche, which is majority-owned by Volkswagen, announced it was scaling back its dealership network in China in response to weak demand in the world’s largest auto market.