Volkswagen Layoffs and Plant Closures Are Imminent

Volkswagen Group is laying off thousands of employees as part of a plan to shutter three of its factories in Germany. In addition, the German carmaker is downsizing other plants throughout Europe.

Speaking to factory workers in Wolfsburg at the company’s headquarters, Daniela Cavallo, Volkswagen’s works council head, said company leadership is “absolutely serious about all this.” Of the approximately 300,000 employees in Germany, Cavallo did not say how many will be affected by the VW plant closures.

“In concrete terms, this means taking out even more products, volumes, shifts and entire assembly lines far beyond to what we have already done,” Cavallo said, per NBC News. “All German VW plants are affected by this. None of them are safe.”

VW plans to deal one more blow to workers — pay cuts. According to Cavallo, the company has proposed reducing pay by 10% across the board. On top of that, there will not be any wage raises at least until the end of 2026. Some workers will lose collective wage agreements and certain bonuses.

Volkswagen Problems

In an effort to remain competitive, Volkswagen needs some restructuring or faces further loss of market share. Imports from China and lack of demand for Volkswagen products in Europe are eroding the company’s bottom line.

Without a significant business overhaul, Europe’s biggest carmaker is just not earning or producing enough, noted Thomas Schäfer, chief executive of Volkswagen Passenger Cars. As energy, supplies, and labor costs have gone up, so has the price of Volkswagen vehicles, and competitors are swooping in.

In September, Volkswagen lowered its annual outlook for 2024, marking the second time the automaker has done so this year. Sales are expected to fall to around $356.7 billion (320 billion euros), a drop of 0.7% versus the previously predicted increase of up to 5%.

This summer, Volkswagen was also hit with a major recall of 307,000 vehicles related to airbag defects. Due to a potential wiring flaw, front passenger airbags could disable even though someone is sitting in the seat. The models affected were Atlas SUVs and Atlas Cross Sport SUVs, years 2020 and newer.