Volkswagen May Shut Down German Factories For First Time In 87 Years—Here’s Why

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New Delhi: Volkswagen, the renowned German automobile manufacturer, is considering closing its factories in Germany due to increasing pressure on profit margins from rising competition particularly from Asian rivals. According to a New York Times report, if Volkswagen proceeds with this decision, it would mark the first time in the company's 87-year history that it has closed factories in Germany, breaking a long-standing commitment to job security for its workers.

The automaker described the situation as "tense" and emphasised that basic cost-cutting measures won't be enough to address the challenges they are facing. Volkswagen further stressed that the situation is highly serious, “The situation is extremely tense and cannot be resolved through simple cost-cutting measures.”

The powerful automobile workers' union, IG Metall has declared that it will strongly oppose any job cuts at Volkswagen's factories. Commenting on the situation, Volkswagen CEO Oliver Blume said, “The European automotive industry is in a very demanding and serious situation.”

Blume, as quoted by the New York Times also expressed concern that “Germany in particular as a manufacturing location is falling further behind in terms of competitiveness. In this environment, we as a company must now act decisively.” Volkswagen has been losing market share in Europe with demand declining, especially in the electric vehicle segment, leading to a consistent drop in sales numbers.

Volkswagen owns a portfolio of 10 well-known brands, including Škoda, Seat, Cupra, Audi, Lamborghini, Bentley, Porsche, and Ducati. On Monday, Volkswagen's shares closed 1.25 per cent higher, recovering some of the gains made earlier in the day.