Brussels – Shakeup for the German auto industry: Volkswagen plans to shut down at least three plants in Germany, lay off tens of thousands of staff and downsize the remaining plants.
This is the first time in the history of one of Germany’s leading automakers that action on domestic factories has been considered. The decision was communicated to the employees yesterday (Oct. 28), causing harsh reactions from the trade unions. News and concrete proposals are expected tomorrow (Oct. 30).
Meanwhile, the company’s factory council head, Daniela Cavallo, commented: “Management is absolutely serious about this.
This is not sabre-rattling in the collective bargaining round. According to Thomas Schaefer, who heads the Volkswagen brand division, “German factories are not productive enough and are operating 25-50% above targeted costs.”
By 2026, the company’s goal remains to increase profitability, which is trudging, given exorbitant costs, to have more spending manoeuvre.
Group board member Gunnar Kilian agrees with Schaefer’s vision: “Without comprehensive measures to regain competitiveness, we will not be able to afford essential investments in the future.” In other words, production in Germany, as it is now, does not profit the company.
The big question concerns what will happen to the workers of the plants that will be closed. Unions’ warning was clear: “If Volkswagen confirms its dystopian path on Wednesday, the board must expect corresponding consequences on our part,” Ig Metal union negotiator Thorsten Groeger announced.
Today, strikes have begun, and Ig Metall has taken the lead. The intentions seem to be to keep them going until workers’ demands (such as wage increases in the new collective bargaining) are met. It should be remembered that workers’ bargaining power is high since half of the supervisory board members are employee representatives, so easy bargaining is not expected.
The symbol of German industry is suffering from the economic pressures on the country, whose growth is increasingly low. Germany is suffering from the high cost of energy and labour, along with Chinese competition, despite the German government’s opposed duties on electric car imports from Beijing.
Last but not least, it is difficult for a high-emission industry to adapt to the European green targets calling for the abandonment of the combustion engine in favour of the battery engine (along with the European commitment to climate neutrality by 2050). After the Dieselgate storm in 2015 (and all the aftermath), Volkswagen, to avoid falling behind, invested in electric vehicles but eventually found a market not ready to take up the new products.
Moreover, the group’s decision impacts the German government as well. Today, the German Chancellery industry summit will have to focus on solving the Volkswagen problem, which risks becoming a black hole for the German economy.
Clear warnings from the political opponents of Chancellor Olaf Scholz, from whom they demand concrete actions or, as an alternative, “resign and give way to Friedrich Merz (leader of the CDU, the Union of Christian Democrats ed.),” according to CDU’s member Dennis Radtke. Attempts are being made to calm tempers on the Social Democratic side of the SPD. “The Federal Chancellor makes the security of the industrial and commercial location a top priority,” recalls Dirk Wiese, the group’s deputy parliamentary group leader.
Mala tempora currunt for Scholz. The chancellor’s popularity at an all-time low is likely to suffer further downfalls, considering that one of the Scholz-saving points was supposed to focus on the auto industry and electric car purchase bonuses. With the far-right hot on their heels in the polls and Volkswagen now bringing workers to their knees, no easy months are in sight for the Social Democrats, and the outcome of the September 2025 elections is becoming less and less of a foregone conclusion.
