Volkswagen (VW) is considering closing some of its German manufacturing plants as it struggles to compete with the growing number of Chinese-made cars entering the European market. VW CEO Oliver Blume recently described the situation in the European automotive industry as “very demanding,” suggesting that the company may need to take drastic measures to stay competitive.
Chinese automakers have been rapidly expanding their presence in Europe, with their market share reaching a record 11% in June. These vehicles, often sold at lower prices due to significant subsidies from the Chinese government, are challenging European manufacturers like VW, which is now contemplating plant closures in Germany for the first time.
The European Union has responded to the influx of China-made electric vehicles (EVs) by imposing temporary tariffs on these imports. However, industry analysts predict that Chinese EVs will make up a quarter of all EV sales in Europe by the end of the year, increasing the pressure on European automakers to reduce costs and stay competitive.
If VW proceeds with the plant closures, it would mark a significant shift in the company’s operations, with potential job losses and the elimination of job protections for German workers. The last time VW closed a plant was in 1988, when it shut down its Westmoreland, Pennsylvania, facility.
Volkswagen’s operations in China, particularly in the controversial Xinjiang region, have also been criticized for their connection to human rights issues. Despite these concerns, VW continues to justify its presence in China on economic grounds.
As Chinese automakers continue to make inroads in Europe, Volkswagen’s response to this competitive threat will be closely watched by the industry and could have significant implications for the future of European manufacturing.
