The leading European automobile group Volkswagen, faced with an “extremely tense situation”, will have to restructure its business and has not ruled out factory closures in Germany, according to an internal document sent to AFP on Monday, September 2.
“Germany […] “is losing more and more ground in terms of competitiveness,” the document states, adding that “factory closures at vehicle and component production sites can no longer be ruled out.”
In this alarming note, Oliver Blume, CEO of the group, believes that Volkswagen “must now act decisively”, while “the European automobile industry finds itself in a very demanding and serious situation”. The news was welcomed positively by the stock markets, with the Volkswagen share price jumping from 13:00 GMT, gaining almost 2% at the top of the Dax stock index.
Sales drop
Volkswagen is suffering from falling sales, a weakening automotive sector and increasing competition from Chinese manufacturers, particularly in China, its main market. Within the group of ten brands, it is the historic VW brand, which yesterday invented the Golf and the Passat, which has been considered the weak link in recent years. The restructuring plan must concern this flagship brand of the group.
A major cost-cutting programme was launched at VW last year. “But the situation is extremely tense and cannot be resolved by simple cost-cutting measures,” Volkswagen management stressed in the document. The industry union IG Metall denounced in a statement an “irresponsible” plan that “shakes the foundations of Volkswagen and massively threatens jobs and sites”.