Volkswagen faces ‘alarming’ situation but won’t abandon Germany: CEO

Volkswagen VWAGY has no plans to abandon its home country, even as it contemplates its first factory closure since the 1980s amid a declining auto market, says CEO Oliver Blume.

Blume, who leads the Volkswagen Group from 2022 and is pushing for massive cost cuts, Bild said on Sunday that it is getting harder to compete in the European car market as rivals enter and sales decline. Several Chinese automakers, including BYD and Cherryhave started to step up their plans to sell their cheap vehicles in Europe even as The European Union is weighing new tariffs.

“The pie has gotten smaller and we have more guests at the table,” Blume said, adding that sales have declined. “At the same time, new competitors from Asia are pushing hard into the market.”

Blume described the situation of the Volkswagen brand as “alarming”, noting that the brand was particularly affected by changes in the market and in Germany. reducing consumer spending. Volkswagen faces a demand shortfall of 50,000 vehicles, or the equivalent of two factories.

Volkswagen last week said it was considering it the closing of factories in Germany and ending a 30-year-old job security pact with workers as it looked at ways to deepen its $11 billion cost-cutting plan. Europe’s biggest carmaker hasn’t closed a plant since 1988, when it did closed its location in Westmoreland County, Pennsylvania. In July, this one WEIGHING the closure of an Audi factory in Brussels as demand for high-end electric cars fell.

A company official told workers last week that the VW brand expects to sell about 14 million vehicles annually going forward “if at all.” In 2023, the company delivered 9.24 million vehiclesmaking it the second largest automaker by sales, surpassed only by Toyota Motor Co delivery of 11.2 million units to consumers.

In response to the possible shutdowns at Volkswagen, the head of the works council, Daniela Cavallo, said management had “massively damaged trust” and compared the closures to a “bankruptcy declaration”, Reuters reports. Cavallo asked Blume to explain why the company is focusing on her partnership of up to 5 billion dollars with electric truck startup Rivian to protect jobs in Germany.

On Sunday, Blume dismissed the idea that the company is leaving workers out to dry and said Volkswagen will not abandon the company it was founded in nearly 90 years ago.

“We are strongly committed to Germany as a location because Volkswagen has shaped generations,” said Blume. “We have employees whose grandfathers also worked at Volkswagen. I want their grandchildren to be able to work here as well.”