Volkswagen to Close German Factory and Restructure... Europe's Auto Industry Faces 'Greatest Crisis'

"Urgent Restructuring Needed"... Approximately 20,000 Jobs to Be Cut

German automaker Volkswagen is set to close a factory in Germany for the first time since its founding and carry out workforce restructuring due to worsening business conditions, according to reports by The Wall Street Journal (WSJ) and CNBC on the 2nd (local time).

Oliver Blume, CEO of Volkswagen Group, stated, "The European automotive industry is facing a very serious situation," adding, "The economic environment has become more challenging, new competitors are entering the European market, and Germany is falling behind in competitiveness as a manufacturing location."

[Image source=AP Yonhap News]

According to German media, Volkswagen is considering closing at least one complete vehicle factory and one parts factory. This would be the first time since Volkswagen's establishment in 1939 that it has shut down a factory in Germany.

As demand for electric vehicles in Europe declines, manufacturers including Volkswagen have been hit hard. Additionally, Volkswagen is struggling with a decrease in market share in China, its most profitable market.

Volkswagen initially announced in June last year that it would cut costs by 10 billion euros (approximately 14.8284 trillion KRW) by 2026. However, it is reported that the company will raise its cost-cutting target by an additional 4 to 5 billion euros (approximately 5.9314 trillion to 7.4142 trillion KRW).

The company is also moving forward with restructuring. This reverses its previous commitment not to reduce jobs in Germany until 2029. The company explained, "Restructuring is urgent to secure greater competitiveness in the short term." German media outlet Der Spiegel estimated that up to 20,000 jobs could be lost due to factory closures and restructuring.

The labor unions strongly opposed the move. Daniela Cavallo, chairwoman of the Works Council, said, "The management is questioning the decades-long agreement that profitability and job security hold equal status," calling it "an attack on our jobs, workplaces, and collective agreements."

IG Metall, Germany's largest industrial union, criticized the plan as "an irresponsible scheme that shakes the foundation of Volkswagen."

This content was produced with the assistance of AI translation services.