Oliver Blume, Volkswagen’s chief executive, spoke in a broad interview about the company’s German cost base. He argued that the costs incurred in Germany should be cut sharply as the automaker faces a combination of weak European demand and a steep drop in revenue from China. By flagging these pressures, Blume signaled a renewed push to restructure the company’s operations in its home market while maintaining competitiveness across its global business, a move that echoes concerns about decades of structural problems at Volkswagen.
He noted that German labor costs are generally higher than the average for VW’s European subsidiaries. This gap translates into higher production expenses in Germany and potentially weighs on margins, especially when sales are uneven between regions. The company has to balance investments in German plants with the need to preserve jobs and maintain productivity while meeting investor expectations about the long-term cost trajectory.
At the end of October, protests emerged in Germany as workers in metal and electrical industries demonstrated, with employees from major automakers including Volkswagen and BMW participating. The actions reflected mounting frustration over the broader conditions in manufacturing and the pressures of adjusting operations amid slower demand and structural shifts in the industry. Labor unions pressed for guarantees and careful transitions, while management argued that adjustments are necessary to protect the group’s competitiveness.
Former chancellor Olaf Scholz commented that the announcements on plant closures were tied to decisions by the group’s leadership. His remarks added a political dimension to the debate as the company sought to realign its asset base. The talks pointed to a plan to shutter multiple plants in Germany as part of an effort to reduce losses, with a view toward preserving the group’s overall health and its ability to fund future investments in new technologies.
The plan involved closing at least three factories in Germany and reducing the workforce associated with those operations. Among the facilities considered most vulnerable was the Volkswagen plant in Osnabrück, which had recently received an additional order from Porsche. The order underscored the plant’s strategic position in the network, yet looming closures raised concerns about local employment and regional economic impact. Executives stressed that layoffs would follow defined processes as the company adjusts to shifting demand.
VW ended its long-standing job guarantee policy in September, a move signaling a shift toward flexibility in staffing, with further reductions possible from mid-2025 as part of an ongoing restructuring program. The changes reflect the tension between preserving German manufacturing capability and ensuring the company can remain flexible amid fluctuating demand and a challenging global environment.
Industry watchers describe an unprecedented crisis across European automakers as demand softens and costs rise, forcing structural reforms across industry players. The situation reflects broader pressures and the need to adapt production networks while balancing employee welfare and shareholder expectations.
Executives stress that cost cuts aim to preserve competitiveness while safeguarding the broader manufacturing network across Germany and maintaining capacity for future growth in a fast-changing market.
The overall picture shows a sector recalibrating traditional models to fit evolving markets, with labor and plant adjustments at the core today. The European auto landscape continues to reorient itself toward new mobility, while managers, workers, and policymakers watch closely how these moves shape jobs and regional economies.