Volkswagen, cutting up to 100,000 jobs - The German car industry is facing a deep structural crisis
Volkswagen executives are holding emergency meetings with workers this week to discuss the most radical cost-cutting program yet. Up to 100,000 jobs could be cut and some plants could close. The German car industry is facing a deep structural crisis due to intense pressure from Chinese competition, the shift to electric vehicles, higher production costs and other challenges.
Workers had previously agreed to cut about 50,000 jobs, mostly through voluntary redundancy programs. But executives later announced that another 50,000 jobs would have to be cut.
With almost 630,000 employees, Volkswagen has become significantly larger than its competitors over the past few decades, as it decided to control more stages of production while simultaneously taking over rival companies and brands such as Skoda, Porsche, SEAT and Bugatti. The German manufacturer has also been slow to switch to electric vehicles at a time when Chinese competitors were starting to take over the market. This has led to a sharp decline in sales in what was once the company's biggest market, China. Volkswagen currently produces about half a million more vehicles in Europe per year than it can sell.
Last month, VW's supervisory board, which includes representatives of shareholders and employees, rejected a second round of cost-cutting proposals. Complicating matters further is the fact that Volkswagen is partly owned by the state of Lower Saxony, which has 20 percent of the voting rights. According to German media, the state government has refused to approve the plans.
The "Target Vision 2030" plan calls for halving the number of models Volkswagen offers and cutting overall costs, particularly in Germany. The automaker will also reduce its global production target. It reached about 11 million vehicles in 2018 and will drop to nine million a year in the future.
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