New Delhi: German automaker Volkswagen is moving toward a major job cut. This could be the largest in the company’s 89-year history, with the loss of nearly 100,000 jobs. The company may close four factories along with the 100,000 job cuts. This is due to weakening demand in Europe, competition from China, and US tariffs.
Why is Volkswagen taking such a drastic step?
Volkswagen is one of the world’s largest automakers. The company once dominated Europe, but the entry of Chinese companies is increasingly challenging Volkswagen. Chinese companies are introducing products with better technology at lower prices. Especially in the electric car race, Chinese automakers are ahead of any other country.
Why will plants be closed?
According to news agency Reuters, the proposals presented to Volkswagen’s supervisory board members include plans to close plants in Hanover, Zwickau, Emden, and Audi’s Neckarsulm plant. These plans are expected to be discussed at the board meeting scheduled for July 9.
If approved, these plans would threaten approximately 45,000 jobs. Negotiations have already been held with unions to reduce approximately 50,000 jobs by 2024. A total of up to 100,000 workforces are expected to be affected. If this happens, this would be the largest restructuring in the history of the auto industry.
What about investment cuts?
Volkswagen is not only planning to cut jobs but is also reducing its investment. Reports suggest that Volkswagen is considering reducing its investment by approximately 15% over the next five years. This reduction would reduce the company’s total investment to 130 billion euros.
Volkswagen is currently facing numerous challenges. The company is facing stiff competition from Chinese players in both the domestic and global markets. Demand in Europe is also declining, and the United States, like many other countries around the world, is imposing tariffs on European companies.
The company is facing numerous challenges. Volkswagen was once the largest car seller in the Chinese market. In 2024, BYD overtook it. Since then, the company’s sales have been steadily declining. Reports indicate that sales of non-Chinese companies in the Chinese market have declined sharply. In 2020, the market share of such companies has fallen from 57% to 32%.
This pressure is no longer limited to China. Companies like BYD, Chery, SAIC, and Leapmotors have doubled their market share in the European market over the past few years, posing a significant challenge for Volkswagen in its home market. The company’s leadership has also acknowledged that its current business model is under pressure. Rising costs and reduced demand are impacting the company’s profits.
