Volkswagen leaders said the company has “one, maybe two” years to turn its main brand around during a stormy meeting with workers on Wednesday, two days after deep cost-cutting measures and factory closures were announced.
finance chief Arno Antlitz took the stage at the company’s Wolfsburg headquarters.
Antlitz said Europe’s car market had shrunk significantly following the COVID-19 pandemic and that the company was facing a shortfall in demand of about 500,000 vehicles, equivalent to about two factories’ worth.
“The market is just not there,” he told the meeting, saying it was the joint responsibility of workers and management to see through the shift to a fleet of mostly electric cars, which would necessitate cost cutting.
Hm. I wonder how big the pay cuts will be in the executive ranks?
Will Germany economic conditions impact more than VW?
The issues at Volkswagen are symbolic of larger dilemmas facing German businesses. Stagnant growth, inflation, and more competition from abroad have all led to concerns over Europe’s largest economy.
VW has not yet provided specific numbers regarding how many of the approximately 120,000 jobs in Germany might be eliminated. It hasn’t also identified which locations might be closed. However, according to statements by the powerful VW works council, the management considers at least one vehicle plant and one component factory in Germany dispensable.
Moritz Schularick, president of the Kiel Institute for the World Economy, sees the announced cost-cutting measures as the beginning of a transformation in the German auto industry.
Creative Destruction?
How much does Chinese EV invasion play in this situation?
