There was not even time to absorb the cold shower of BMW’s downward revision of annual estimates and the new alarm call from Mercedes CEO Ola Källenius, who described the automotive situation in Germany as dramatic, announcing drastic cuts, when the Volkswagen earthquake hit the country.
DOUBLING OF CUTS, 100,000 JOBS TARGETED
According to information from the financial monthly Manager Magazine, the Wolfsburg automotive group plans a massive reduction in personnel that could lead to the cut of up to 100,000 jobs globally in the coming years.
According to these rumors, later picked up by the entire German press confirming their reliability, CEO Oliver Blume has already presented the restructuring concept plans to the board of directors as part of the new strategic plan called “Zielbild 2030,” Goal 2030.
The proposed workforce reduction would represent twice the previously estimated target of layoffs for the company, which currently remains the largest car manufacturer in Europe with about 657,000 total employees, of which 300,000 are active in Germany alone.
The final word on the project now belongs to the supervisory board, which will meet to decide on July 9.
A VW spokesperson stated that the company “will not comment on internal and confidential documents” and that the matters in question will be discussed and approved by the competent bodies. At the same time, the spokesperson confirmed that in recent months the group’s board of directors has worked intensively on a future restructuring plan. The goal, they added, is a complete transformation: “It is about making the company as a whole more efficient and lean, as well as consistently exploiting technological synergy potentials. The entire group, including brands and companies, must change radically.”
FOUR PRODUCTION PLANTS AT RISK
According to revelations by Manager Magazine, the strategic plan foresees the possible closure of four production plants in Germany in the medium term, coinciding with the end of the life cycle of the models currently in production. The sites affected by the line shutdowns are the Volkswagen plants in Hannover, Zwickau, and Emden, as well as the Audi plant located in Neckarsulm.
The restructuring project aims to reorganize the entire structure of the Wolfsburg manufacturer, separating both the main Volkswagen brand and the components division from the rest of the group to make them autonomous companies. Internal sources specify that the details of the maneuver regarding the final figures are not yet defined and that the central document “deliberately does not indicate a single figure.”
THE WALL OF THE UNIONS
The reaction of the workers’ representatives to the details revealed so far was immediate and harsh. In a joint statement from the metalworkers’ union IG Metall and the group’s works council, Christiane Benner, Daniela Cavallo, and VW’s chief negotiator Thorsten Gröger dismissed the measures as “irresponsible threats,” assuring that attacks on Volkswagen’s special status, co-determination, and production sites “will be resisted with all forces.”
According to the unions, instead of showing “blind activism,” the board of directors should finally focus on its real task, namely ensuring “competitive products, technologies, group structures and synergies, and consequently also secure jobs.”
THE END OF AN INDUSTRIAL MODEL
Volkswagen’s strategic decisions come at a time of strong competitive and industrial pressure for the German automotive sector, which is dramatically involving the entire supply chain, with large supplier companies also dealing with downsizing plans. It is no longer just Volkswagen’s fate. What the German automotive industry is going through is no longer a mere moment of difficulty but a transformation destined to profoundly change the sector.
The Wolfsburg group is the most visible symbol of a change involving all major manufacturers (not just German). For years, the national industry built its strength on combustion engines, gaining market shares and high margins worldwide. Today, however, the race towards electric mobility requires enormous investments, new production processes, and skills that until a few years ago were not central.
Driving this direction are no longer just industrial strategies but increasingly the evolution of demand: despite an still insufficient charging network, interest in electric cars continues to grow, supported by the return of public incentives and the surge in oil prices triggered by the war with Iran.
COMPETITION AND TECHNOLOGICAL LAG
This is precisely where the most evident weaknesses emerge, according to an analysis by the Ard news outlet: German brands are expanding their electric model offerings, finally reaching the small car segment, but meanwhile they must continue producing vehicles with traditional engines. The coexistence of two different industrial systems weighs on the balance sheets: many plants remain underutilized and fixed costs increase without production volumes managing to compensate.
In a country where labor costs are among the highest in Europe, this situation becomes particularly difficult to sustain. Meanwhile, Chinese manufacturers, from Geely to BYD to Nio, are gaining ground by offering electric cars competitive both technologically and price-wise, putting pressure not only on German carmakers but also on the entire supplier chain.
Market difficulties are compounded by those linked to innovation. Today’s cars are increasingly defined by software, and it is precisely in this field that the German industry has accumulated delays that have become evident in recent years.
Volkswagen represents the most emblematic case, concludes Ard: the launch of the Golf 8 was accompanied by a long series of IT problems and digital system malfunctions, while the development of autonomous driving remains an open issue, an area in which the group continues to chase competitors who have moved faster.
A FORCED TRANSITION
In the commentary by Neue Zürcher Zeitung (NZZ), the crisis of the German automotive industry is interpreted differently from the more widespread reading. For years, politicians and economists have reproached manufacturers for underestimating electric vehicles to defend leadership in traditional engines but, according to the Swiss daily, the reality “is not so simple.”
NZZ argues that the shift to electric mobility was not determined exclusively by market dynamics but mainly by political intervention. “The trend towards electric mobility is not determined by market forces,” the newspaper observes, recalling how the European Union has oriented car manufacturers’ strategies through fleet emission limits, effectively favoring electric vehicles in achieving climate goals.
A system that, the analysis highlights, considers electric car tailpipe emissions as zero while assigning much less weight to those generated during vehicle production and the electricity needed to power them. The German automotive industry initially welcomed the “green transformation” promoted by politics, interpreting it as a new development opportunity.
The transition instead pushed German manufacturers towards electric technology where they have no competitive advantage compared to rivals. On the contrary, China fully benefits thanks to its global leadership in batteries. “The decline of the German automotive industry,” concludes Neue Zürcher Zeitung, “which since 2019 has already eliminated 100,000 jobs according to Federal Employment Agency data, thus appears to be the result of ideological policies that, behind the climate goal, end up hitting the backbone of prosperity in Germany.”
CUTS ARE NOT A STRATEGY
Highlighting the complexity of the challenge and the uncertainties about its outcome is an editorial in the economic daily Handelsblatt, according to which “the truth is this: a simple reduction in jobs is not a strategy in itself,” even if large-scale. For the newspaper, management must rather “explain why more and more customers choose not to buy a Volkswagen and instead opt for a Toyota or a BYD,” because, as necessary as it may be, “simply cutting costs is not enough to win back even a single customer.”
