More Than Critical! Volkswagen Faces Factory Closures
Volkswagen (VW) CEO Oliver Blume has revealed that the company’s current condition is ‘more than critical’, amid global automotive industry pressures, competition from Chinese manufacturers, and the threat of closing several plants.
The statement was made by Blume ahead of a meeting with Volkswagen workers at several company facilities in Germany. In that meeting, he will explain the company’s cost-saving and restructuring plans.
Blume said Volkswagen and the German automotive industry are facing the greatest change in their history due to various global pressures and competition from Chinese producers.
‘The situation we are facing now is more than critical,’ said Blume in an interview published on the company’s internal network.
According to him, Volkswagen’s current profit levels are not yet sufficient to ensure the company has long-term resources to develop technology, new products, or maintain its production locations.
Volkswagen is considering large-scale workforce reductions. However, Blume stressed that no final decision has been made regarding plant closures.
Nevertheless, he said the company has not yet seen a way for several plants to remain profitable in the 2030s. The plants in question are located in Emden, Hannover, Zwickau, and Neckarsulm.
‘We currently cannot see a way for the plants in Emden, Hannover, Zwickau and Neckarsulm to remain profitable in the 2030s,’ he explained.
Blume said plant closures would be a last resort. Therefore, Volkswagen is still seeking alternative uses for facilities whose production may be halted. One of these is the plant in Osnabrueck - the company is said to be in advanced talks with several companies from the defence industry to find an alternative function for the facility.
In addition to potential plant closures, Volkswagen is also facing the problem of excess production capacity in Europe. Blume estimates there is excess production capacity of up to around 500,000 vehicles per year.
Pressure on Volkswagen does not only come from competition with Chinese manufacturers. Blume also highlighted US tariffs, the war in the Middle East, and regulatory burdens as challenges that are increasingly weighing on the company’s condition.
When asked whether the automotive industry situation will improve, Blume instead warned that global risks could potentially worsen. ‘On the contrary, we must assume that risks will worsen throughout the world,’ he concluded.