Volkswagen Tightens Belt, Likely to Avoid Layoffs

German automaker Volkswagen, facing the first factory closure crisis since its founding due to financial difficulties, has expressed its intention to avoid layoffs.

Oliver Blume, Volkswagen CEO, said in an interview with German media Bild am Sonntag on the 8th (local time), "There are employees whose grandfathers worked at Volkswagen," adding, "I hope their grandchildren can still work here." However, he noted that current cost-cutting measures are insufficient and that additional austerity programs are being prepared.

[Image source=Reuters Yonhap News]

Earlier, on the 2nd, Volkswagen announced plans to reduce at least two factories in Germany and terminate the employment stability agreement maintained since 1994. The management's plan was to increase the cost-cutting target, initially set at 10 billion euros (about 14.8 trillion KRW) by 2026, by an additional 4 to 5 billion euros.

As Volkswagen, a symbol of German manufacturing, mentioned the closure of domestic factories as a last resort, various rescue ideas poured in from the political sphere. The federal government decided to partially revive subsidies for electric vehicles purchased by corporations. The Social Democratic Party (SPD) proposed lowering industrial electricity rates to reduce production costs or adopting a four-day workweek to prevent layoffs.

Some voices argued that the European Union (EU)'s electric vehicle transition and internal combustion engine vehicle regulations have pushed Volkswagen to the brink, demanding the abandonment of plans to ban the sale of internal combustion engine vehicles by 2035.

Christian D?rr, parliamentary leader of the pro-business Free Democratic Party (FDP), criticized, "Unreasonable European policies that hinder automakers are the cause of the crisis," adding, "The EU's demands have led to insane bureaucracy but have not reduced a single gram of carbon dioxide."

In response, Thierry Breton, EU Commissioner for the Internal Market, said in an interview with the German economic newspaper Handelsblatt on the 9th, "Balancing climate goals and competitiveness is essential," but countered that European companies have failed to sufficiently convince consumers of the appeal of electric vehicles.

On the same day, Volkswagen Group replaced its finance director and announced self-help measures such as raising prices of representative Volkswagen models like Golf, Tiguan, and Touareg by up to 2,500 euros (about 3.71 million KRW). Handelsblatt evaluated, "There were no price increase plans earlier this year. The scope and magnitude of the increase are unprecedented."

Resistance from factory workers has also been confirmed to be considerable. According to dpa news agency citing local media, employees at Audi's subsidiary factory in Brussels, Belgium, stole keys to about 200 vehicles, demanding a detailed explanation of future plans.

Earlier, Volkswagen announced in July that it would halt production of the Audi electric sports utility vehicle (SUV) Q8 e-tron at this factory and was considering closing the plant. Approximately 3,000 employees work at this factory, where workers have set up tents and are staging protests against the closure.

This content was produced with the assistance of AI translation services.