Volkswagen plans to close three plants in Germany and lay off thousands of employees

The first European automobile group, the German Volkswagen, plans to close at least three factories in Germany and cut “tens of thousands” of jobsannounced the works council.

“The board wants to close at least three VW plants in Germany. It also intends to reduce the size of all remaining plants in the country,” the chairwoman of the group’s works council said in a statement. Daniela Cavallo.

According to an article in the business daily Handelsblatt, the manufacturers of cars wants to save 4,000 million euros. “The next meeting for wage negotiations is on Wednesday, and it is a fact that Volkswagen is at a turning point in its history. The situation is serious, and the responsibility of the social partners is enormous,” he added.

The plan, presented by the management, includes a 10% pay cut for all employees and the transfer abroad of numerous activities of the group, currently in Germany, indicated the president of the works council in a statement.

Without confirming the measures immediately, lThe group’s management indicated in a statement that it had to “tackle the problem at its roots.” “The European car market lost 2 million vehicles since 2020,” he added.

“We are not being productive enough in our German plants, and factory costs are currently 25% to 50% higher than we had anticipated,” he explained.

The plans by Volkswagen, which employs 120,000 people in Germany, coincide with a difficult economic time in the country, contributing to the government’s high level of unpopularity.

A spokesman for the head of government Olaf Scholz who belongs to the social democratic party, warned against a wave of layoffs.

The German brand is suffering from a drop in demand in several parts of the world, especially in China, its main market.

Added to this is the advance of Chinese brands throughout the continent, especially in the electric vehicle segment, which is hitting all automotive companies in the region.

EU countries have been pushing for the adoption of high customs duties on Chinese electric cars, an initiative that immediately prompted an angry response from the Asian giant.

The initiative provides for provisional additional tariffs of up to 36% on Chinese electric vehicles, which would be added to the already existing rate of 10%.

The plan is impose additional tariffs to the largest Chinese manufacturers: 17% to BYD, 19.3% to Geely and 36.3% to SAIC. The remaining manufacturers will be assessed an average additional rate of 21.3% if they cooperated with the subsidy investigation, and 36.3% otherwise. Thus, in certain cases, customs duties could amount to more than 46%.

In an official note mentioned by the state channel CCTV, the Chinese Ministry of Commerce indicated that the country “firmly opposes the unfair, non-compliant and unreasonable protectionist practices of the EU in this case.”

The European Commission, the EU’s executive arm, had proposed in July imposing high provisional tariffs on Chinese manufacturers over suspicions that these firms benefit from state aid.