Volkswagen is considering closing German factories

Volkswagen, the best-selling brand in Slovenia, is considering closing factories on its home territory for the first time in its 87-year history.

The German auto giant says it cannot rule out the possible closure of German factories due to the unpredictable and difficult conditions in the auto industry, meaning they will also break a 1994 pledge to not lay off workers until 2029.

"The European automotive industry is in a very challenging and serious situation," said Oliver Blume, CEO of the Volkswagen Group, recently.

Among the reasons, he cited new competitors, mainly Asian, entering European markets, the deterioration of Germany's position as a dominant production location and the need for "decisive action".

The company's half-yearly results show that VW will not reach its goal of 10 billion euros in savings by 2026. The start of talk of closing factories has shaken the German public, employees, and above all, shaken the reputation of the brand.

Operating profit fell from 1.64 billion euros in the previous year to 966 million euros, which also includes the sale of the luxury brands Audi and Porsche and the mass market brands Seat and Škoda.

The company has sought to cut costs through early retirements and buyouts to avoid forced layoffs, but now says those measures may not be enough. The idea of closing German factories was immediately criticized by workers' representatives and trade unions.

"The management's approach is not only short-sighted but also dangerous, as it can destroy the heart of Volkswagen," said Thorsten Groeger, chief negotiator of the industrial union IG Metall.

Employee representative Daniela Cavallo also defended the employees and blamed the failure on management, which "made several wrong decisions" in recent years. Its idea is to reduce the complexity of the board and exploit the synergy between the different brands in the Volkswagen Group.

It is not yet known which plant is at the top of the list for closure, but according to all reports, one plant for the production of components and one plant for the final production of cars could be closed.