Volkswagen in deep crisis?
Volkswagen, the German automotive giant, is facing a crisis that could lead to the closure of several plants in Germany. According to the company’s works council, at least three plants are in danger, with the Osnabrueck plant particularly at risk after the loss of a contract with Porsche. The situation is exacerbated by Volkswagen’s recent attempt to reduce wages by 10 per cent for two consecutive years during union negotiations. If approved, this would reduce employees’ actual wages by about 18%.
The causes of the crisis
Two main factors fuel this crisis. Firstly, the company is trying to respond to demands to reduce emissions and convert to electric mobility, a costly transition that requires huge investments. Volkswagen is currently the world’s second largest producer of electric vehicles, with a market share of 7 per cent, but faces growing competition from giants such as Tesla and BYD, which dominate the sector
The economic slowdown in Europe has reduced demand for vehicles, hitting sales and creating pressure on margins. With market capitalisation at around 3.2 times net profit, Volkswagen’s future looks uncertain as the company tries to balance cost-cutting needs with pressure to maintain current jobs.
Institutional and trade union reactions
The German government, in particular Deputy Minister Valentino Valentini, called on the company to consider the impact of its decisions on the labour market. The trade union IG Metall also strongly criticised Volkswagen’s plans, calling them a ‘stab in the heart’ for employees and threatening to take action to protect workers’ rights
What future for the industry?
The issues faced by Volkswagen are not isolated: the entire European automotive industry is under pressure to adapt to stricter environmental policies. However, uncertainty also surrounds the approach European governments will take towards internal combustion cars, which are still considered essential for many global markets. The combination of a weak market, Asian competition and a technology transition that is not yet stable puts European leadership in the sector at risk.
How this scenario evolves will determine the future of jobs at Volkswagen and related plants, but also of the entire automotive sector in Europe.