Volkswagen: Circles: VW is considering relocating Golf production to Mexico

The ailing car manufacturer Volkswagen is considering, among other things, relocating Golf production from the main plant in Wolfsburg to Mexico as a future option. This is one of the numerous scenarios that are currently being examined by management for plant occupancy, the news agencies dpa-AFX and dpa learned from those close to the group. However, this variant is not considered the most likely outcome of current considerations.

VW did not want to comment on the information. A works council spokesman spoke of speculation that was far from possible resolutions. The “Handelsblatt” had previously reported on the mind games. The Golf is considered by many – like the Beetle before it – to be the flagship model among VW models. The Golf is currently only manufactured for the global market at the company headquarters in Lower Saxony. In Mexico, the group has a factory in Puebla, which previously also built the Beetle for the North American market.

Current corporate crisis characterized by collective bargaining conflict

Management and employee representatives in Wolfsburg are currently fighting for cost reductions in collective bargaining. This is primarily about labor and factory costs, with layoffs and factory closures being discussed.

Volkswagen is demanding, among other things, wage cuts of ten percent. According to the company, this is necessary in order to be able to make future investments. The works council is primarily demanding a secure timetable for the coming years for concessions. The next round of negotiations is scheduled for the beginning of next week.

Are decisions made in the planning round?

How the future models will be distributed among the factories is traditionally a topic at Volkswagen in the so-called planning round, which determines investments for the next five years. This time, the plants and the work to be distributed among them are also part of the collective bargaining negotiations because of the cost reductions planned by the company.

If the Golf, which, along with the Tiguan, is the flagship of the Wolfsburg main plant, were to be discontinued, the employees would probably demand other models that would ensure future work in the plant. According to the information, another variant for Golf production is a VW factory in Poland. A so-called overflow production of the Golf from Wolfsburg was planned for the plant in Poznan anyway.

The future of the combustion engine Golf is already open

Both Mexico and Poland are considered cheaper than Germany. Tariff threats from the former and new US President Donald Trump would probably affect both locations for exports to the USA. It remains to be seen how long the combustion engine Golf from Wolfsburg could still exist.

Volkswagen has prepared for a fundamental ban on combustion engines in the EU from 2035 and has invested a lot of money in new electric models. A new high-volume electric model would therefore be possible at the Wolfsburg location, such as a fully electric variant of the Golf called “ID.Golf”.