Can Volkswagen survive? | DW News

Summary

Volkswagen faces challenges as it contemplates closing factories in Germany due to a price war with Chinese electric vehicle manufacturers and high costs associated with the transition to e-mobility. Despite potential EU tariffs on Chinese imports, it may be too late to protect European carmakers. Workers are divided, fearing job losses, while Volkswagen management seeks a compromise to maintain profitability. Discussions highlight the difficulty of competing with China's state-subsidized electric vehicles and explore options for German manufacturers, including potential cost reductions or alliances, but reject the idea of a European 'car champion.'

Takeaways

• 🚗 Volkswagen is considering closing factories in Germany due to declining market conditions and high costs.
• ⚡ The company is heavily investing in the transition to electric vehicles (e-mobility) and alternative propulsion systems.
• 💶 Volkswagen is facing intense price competition, especially from Chinese manufacturers producing cheaper electric vehicles supported by state subsidies.
• 🇨🇳 China's push for new energy vehicles (electric, hybrid, fuel cell) is causing Volkswagen to lose sales in both traditional and electric car markets.
• 💼 The EU has proposed raising tariffs on Chinese electric vehicles to protect European manufacturers, but Volkswagen's actions suggest this may be too late to help.
• 👷 The head of Volkswagen’s Workers Council emphasized the need to maintain profitability while addressing worker concerns about potential job losses.
• 🔧 Despite good profitability for the overall Volkswagen Group, the VW brand needs further transformation to stay competitive.
• 👥 Workers are divided over the potential closures, with tensions between the board and the workers' council growing.
• 💡 Other solutions, like severance packages, reduced workdays, or cutting holidays, are being discussed to avoid layoffs.
• 🌍 A proposed idea of creating a European champion for electric vehicles, similar to Airbus, was discussed but considered too complex and difficult to manage.

Q & A

What are the primary reasons for Volkswagen considering factory closures in Germany?

Volkswagen is facing a combination of a weak market outlook in Germany, high investments in the transition to electric vehicles (e-mobility), and strong competition from Chinese manufacturers, leading to the consideration of factory closures.

What type of competition is Volkswagen facing from Chinese manufacturers?

Volkswagen is facing intense price competition from Chinese manufacturers, particularly in the electric vehicle (EV) market, as China has heavily subsidized its EV industry for over a decade.

What impact do Chinese state subsidies have on the global EV market?

Chinese state subsidies have enabled domestic manufacturers to produce electric vehicles at lower costs, leading to a price war and putting pressure on foreign companies like Volkswagen that are still transitioning from traditional combustion engines to electric vehicles.

Are the recently announced EU tariffs on Chinese electric vehicles expected to help European car manufacturers?

The EU tariffs, although aimed at stabilizing the market, are considered too late to protect European manufacturers. The final decision on the tariffs is expected by the end of October.

Why are Volkswagen workers concerned about potential plant closures?

Volkswagen workers fear losing their jobs due to the company's cost-cutting measures. Despite the company's profitability, there is concern about insufficient production to justify keeping certain plants open.

Can Volkswagen workers successfully prevent plant closures?

It is unlikely that workers can prevent the closures. While labor unions may push for a compromise, Volkswagen's need for profitability and future investment may still lead to plant closures.

What other measures could Volkswagen take besides closing plants to address its financial issues?

Volkswagen could consider reducing labor costs through cuts in holidays, reducing working days, or implementing measures similar to the 1993 introduction of the four-day workweek to avoid layoffs.

Why is the transition to electric vehicles particularly challenging for Volkswagen in China?

Volkswagen has historically focused on internal combustion engine vehicles in China, and its shift to electric vehicles has been slower compared to Chinese companies that have been heavily subsidized and supported by their government.

What is the possibility of merging European car manufacturers to create a 'European Champion' in the automotive industry?

The idea of merging European car manufacturers like Volkswagen, Mercedes, and BMW into a single entity is considered impractical. Such a merger would create a massive, difficult-to-manage corporation, and instead, simplifying and streamlining operations at companies like Volkswagen is seen as a more viable solution.

What are the challenges facing the adoption of electric vehicles in Germany compared to other European countries?

In Germany, the adoption of electric vehicles is lagging behind other European countries due to a combination of factors, including price concerns, consumer mindset, and how people are accustomed to driving. This issue extends beyond Volkswagen and reflects broader societal preferences.