Pressure in China helps convince Volkswagen it’s time to change
The restructuring would also halve Volkswagen’s models to 75 and streamline management as the company faces weaker profits and intense competition in China.
- On Thursday, Volkswagen announced a sweeping restructuring plan including 50,000 job cuts and the phase-out of production at four German plants—Emden, Zwickau, Hannover, and Neckarsulm—by 2034.
- CEO Oliver Blume pointed to turbulence in China, where sales declined over 20% this year, driving a 31% drop in first-half profits to 3.1 billion euros .
- Stefan Bratzel of the Center of Automotive Management called the headwinds a "warning sign for the entire German automobile industry," as Volkswagen faces up to 27.5% tariffs on cars imported from Mexico.
- Volkswagen shares rose 8% on Friday as investors responded to the restructuring, which includes halving the number of models from around 150 to 75 to lower fixed costs.
- Analysts suggest the move could have a "halo effect" on other German manufacturers, as the German economy has stagnated with only 0.2% growth last year amid broader competitive pressures.
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12 Articles
The Volkswagen Group's Supervisory Board unanimously approved the Future Plan 2030 presented by the board of directors, a transformation programme with which the German manufacturer aims to strengthen its competitiveness and adapt its structure to the profound change taking place in the automotive sector.
Never before in its ninety-year history has the German carmaker Volkswagen been in such trouble. Sales in China are weakening, US tariffs are making imports to the US more expensive, and European factories are running out of orders. The biggest problem is margins, which are falling sharply. The company has therefore decided to lay off workers and is considering closing some factories.
Associated Press News
Pressure in China helps convince Volkswagen it's time to change
Volkswagen’s sweeping restructuring underlines the force of the China shock hitting Germany’s economy as the world’s biggest car market, short years ago a major profit center, rapidly becomes a major competitive challenge.
Overcapacity of 500,000 units on European production lines has forced the veteran German automaker to fundamentally overhaul the structure of its factories. The post Volkswagen confirms layoffs of 50,000 people and shutdowns of some of its factories appeared first on Digiato.
The German carmaker is under pressure from, among other things, increasing Chinese competition, high domestic costs and US import tariffs, the Independent reports.
Volkswagen will cut 50,000 jobs and half its models. In Ecuador, the impact will depend on origin, tariffs and regional supply
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