Volkswagen would seem ready to make an unprecedented decision in its 87-year history: 15 thousand layoffs, the possible chiusura di two or three Settlements in Germany and theearly termination of job security agreements, currently valid until 2029. These are the options that emerge from the Jefferies analysts report, after a roadshow with the company's top management in North America. According to their reports, the group does not have a "plan B" to address the crisis in the European automotive market. Despite the inevitable labor tensions, the German giant seems determined to move forward with the cuts, even considering bypassing the approval of the Supervisory Board and employee representatives.
Volkswagen: Cuts More Drastic Than Expected
Volkswagen could reduce its production capacity in Europe by 500-750 cars a year, with extraordinary costs estimated at between 3 and 4 billion euros for plant closures and layoffs. The closure hypothesis would concern some German factories (in reality the German sites taken into consideration would be even more, up to five) marking a historic turning point for a company that had never closed a factory in Germany since its foundation in 1937. The managers, including the CEO Oliver flower, believe that this decision can be taken without the consent of the Supervisory Board, with the aim of reducing costs and managing the crisis.
Labor clashes on the horizon
I sindacati German are already on the warpath, accusing the management of having invested too much in software and electricity without obtaining concrete results. Their chances of strike, however, are limited: by law, they can only protest wage issues, but not closures or layoffs, unless specifically provided for in contracts. This puts workers in an uncomfortable position, with pressure mounting to find new agreements.
According to Jefferies, unions could be forced to negotiate, while the German automotive giant would be ready to impose cuts if negotiations fail. Social and union tensions are therefore destined to grow, with the risk of interruptions in production activities.
Lo Audi plant in Forest, in Brussels, is already the scene of manifestations by thousands of workers concerned about the future of their jobs and demanding an end to Chinese “dumping” of industrial products. Although the factory produces electric vehicles in line with the European Green Deal, demand is falling due to high prices and consumer fears about too fast devaluation and the charging network, making the situation worse.
Pressure from the political world
The plan has also attracted the attention of the German government. The Chancellor Olaf Scholz reiterated the need to protect jobs and keep factories open, while the Prime Minister of Lower Saxony, Stephen Weil, a 20 percent shareholder in Volkswagen, has asked the company to explore all possible alternatives to avoid closures. The authorities could therefore try to push the company toward a less drastic solution, offering a “Plan B” that, so far, the management has ruled out.
A complex scenario
Volkswagen's decision to drastically reduce its production structure comes at a time of strong crisis for the European automotive industry, grappling with Chinese competition and the challenges of the transition to electric vehicles. electric car sales in Europe have fallen by 4% since the beginning of the year, with negative peaks of -8% in July and -33% in August. This decline has reduced Volkswagen's operating margin to 2,6%, far from the 6,5% target set for 2026.
Jefferies analysts noted that while the downsizing of the Volkswagen brand is nothing new, the determination with which management intends to do so marks a major turning point. Volkswagen is aiming to address overcapacity and high costs, trying to regain competitiveness in a market ofelectric car in trouble, while in China, the world's largest electric vehicle market, sales continue to grow.
