Brussels – Shock for the German car industry: the The Volkswagen brand plans to close at least three plants in Germanylaying off thousands of employees and downsizing other plants.
In the history of one of the most important German car manufacturing companies, it is the first time action on domestic factories is being considered. The decision was communicated to employees yesterday (October 28), which caused strong reactions from the unions. News and concrete proposals are expected for tomorrow (October 30).
Meanwhile the the head of the company’s works council, Daniela Cavallo, he said: “Management is very serious about this. This is not a show of force during collective bargaining“. The costs of the German factoriesaccording to the comment of the head of the Volkswagen division, Thomas Schaefer, “I am in the moment 25 to 50 percent higher than we expected.” By 2026, the company’s objective remains to increase profitability, which is struggling in the face of excessive costs, to have greater spending maneuvers.
An integrated vision with Schaefer that of the group’s board member, Gunnar Kilian:”No global measures regain competitiveness, heaven we will be able to give it necessary investments in the future.” Expressed in other words: Production in Germany, as it is now, is not convenient for the company.
The big question is what will happen to the workers in the factories that will be closed. The warning of the most prominent unions: “If Volkswagen confirms its dystopian trajectory on Wednesday, the the council must expect the corresponding consequences from us“, he announced union negotiator In Metal Greek Thorsten.
From todaythe strikes beganpromoted by Ig Metall. The plan seems to be to let them continue until the demands of the workers are accepted (such as the increase in wages in the new collective bargaining). It should be remembered that the bargaining power of the workers is high, since half of the members on the supervisory board are representatives of the employees, so simple bargaining is not expected.
The symbol of German industry is suffering from the economic pressures on the countrywhose growth is becoming lower. In Germany thehigh energy and labor costtogether with Chinese competitiondespite the German government opposing tariffs on Beijing’s electric car imports.
Last, but not least, is the difficulty of a high-emitting industry to adapt green goal europe which requires the abandonment of the combustion engine in favor of the battery only (along with the European commitment to climate neutrality by 2050). After the Dieselgate storm in 2015 (and all the fallout), In order not to be left behind, Volkswagen invested in electric vehicles, but in the end found a market that was not ready to accept the new products..
In addition, group decision influences also the German government. Il The German Chancellor’s Industry Summit today focus on how to solve the Volkswagen problem, which risks becoming a black hole for the German economy.
A clear warning from the Chancellor’s political opponents Olaf Scholzwhich they ask for concrete actions or in return”.give up and make way for Friedrich Merz (leader of the CDU, Union of Christian Democrats ed.)”, in the words of Dennis Radtke, a member of the CDU. They want to moderate things on the Social Democrat side of the SPD. “The Federal Chancellor makes the the safety of industrial and commercial premises as an absolute priority“, remember Dirk Wiese, the group’s deputy parliamentary leader
Bad weather is coming for Scholz. The Chancellor’s approval rating is at historic lows and risks falling further, given that One of Scholz’s saving graces was a focus on the car industry and electric car purchase bonuses. With him far to the right on his heels in the polls and Volkswagen now bringing workers to their knees, no months ahead easy for the Social Democrats and the outcome of the September 2025 election is less clear.
Interview between the Time.news Editor and Industry Expert on Volkswagen’s Plant Closures
Editor: Good day, everyone. Today, we have with us Dr. Markus Klein, an esteemed expert in the automotive industry and labor relations. With the recent announcement from Volkswagen about closing three plants in Germany and laying off thousands of workers, we are keen to get an expert perspective on the implications of this decision. Welcome, Dr. Klein.
Dr. Klein: Thank you for having me. It’s a pleasure to be here.
Editor: Let’s start with the basics. Volkswagen’s move to close domestic factories is unprecedented in the company’s history. What do you think prompted this drastic decision after so many years of stability?
Dr. Klein: This decision is indeed a shock for the industry and signals serious underlying issues. Volkswagen is grappling with soaring production costs—between 25 to 50 percent higher than anticipated—mainly due to high energy prices and labor costs in Germany. These economic pressures, coupled with fierce competition from Chinese electric vehicle manufacturers, leave Volkswagen with no choice but to reassess its operations strategically.
Editor: Daniela Cavallo, head of Volkswagen’s works council, emphasized that management is serious about this and it’s not merely a bargaining tactic. How do you interpret that statement in the context of labor relations?
Dr. Klein: It’s a clear indication that Volkswagen is taking a hard line in negotiations. When management states that they are committed to restructuring rather than using threats as leverage, it suggests they are preparing for significant changes. This move could disrupt the usual balance of labor negotiations in Germany, where unions have considerable power, especially given that employee representatives sit on the supervisory board.
Editor: Speaking of unions, we’ve seen immediate reactions with strikes initiated by IG Metall. What are the likely ramifications of this union response?
Dr. Klein: The strikes are a direct response to employee fears and frustrations over job security, and they could escalate if negotiations do not go positively for the workers. Historically, unions in Germany, particularly IG Metall, wield significant influence, and they will likely mobilize their members aggressively to secure better terms in light of potential layoffs. The threat of an extended negotiation process could also pressure Volkswagen’s management to reconsider their approach.
Editor: The closures will undoubtedly have ripple effects in the local economies as well. Can you explain the broader impact on the German automotive sector and its production landscape?
Dr. Klein: Absolutely. Volkswagen’s decision may trigger similar moves across the industry, especially as manufacturers feel the heat from rising costs and a shifting marketplace towards electric mobility. A contraction like this could lead to job losses not only within Volkswagen but also at suppliers and related businesses. The German automotive industry, a cornerstone of the national economy, would face a significant transformation, potentially leading to a jobs crisis in the region.
Editor: You mentioned the broader economic pressures, like competition from Chinese manufacturers and evolving green goals. In your opinion, how well is Volkswagen adapting to these changes?
Dr. Klein: Volkswagen’s transition has been slow but necessary. The company invested heavily in electric vehicles post-Dieselgate, but they underestimated the market readiness for these innovations. The mismatch between their product offerings and consumer demand has hurt their competitive edge. To survive, they now need to accelerate their transition to electric and adapt to the regulatory landscape that prioritizes sustainability.
Editor: That’s an insightful analysis. Lastly, what do you foresee for the future of Volkswagen and the German automotive industry amid these challenges?
Dr. Klein: The future is precarious. If Volkswagen can successfully navigate this transition by reengineering their operations and aligning with market demands, they could emerge stronger. However, failure to adapt swiftly to the evolving automotive landscape may pose a serious threat not just to the company, but to the entire German automotive sector. It’s a pivotal moment that will determine the direction of one of the world’s most historic industries.
Editor: Thank you, Dr. Klein, for your valuable insights today. It’s clear that Volkswagen’s current situation reflects deeper issues within the automotive industry and broader economic challenges. We’ll certainly be following this story closely.
Dr. Klein: Thank you for having me. It’s important to keep an eye on these developments, as they will have far-reaching implications for workers, the industry, and the economy as a whole.