Proactive Investors - Volkswagen Group (ETR:VOWG_p) is contemplating closing two factories in Germany as it faces challenges in shifting from fossil fuel vehicles to electric models.
The automaker has informed its works council that it may shut down a major vehicle manufacturing plant and a component factory to achieve cost savings.
This move highlights the struggle traditional European carmakers face in transitioning from profitable internal combustion engine vehicles to less profitable electric vehicles.
The potential closures, which would be VW's first in Germany, come as the company and other European manufacturers feel increasing competition from Chinese electric vehicle makers, who benefit from lower costs and higher profit margins.
Leadership has acknowledged the growing pressure on the European automotive industry, especially in Germany, where the economic environment has become more challenging.
The works council has vowed to resist the proposed closures, arguing that the focus should instead be on improving products, processes, and synergies to strengthen the company’s position.