AutoBeta(AutoBeta.net)09/12 Report--

On Sept. 10, EDT, Volkswagen announced that it would terminate a series of job-guarantee agreements with trade unions that were supposed to protect jobs until 2029, but will now end early in the middle of next year.

The carmaker's latest move shows that Germany is falling further behind in terms of competitiveness. Volkswagen CEO Obermu said in a statement that all Volkswagen brands need to be fully restructured in the face of fierce competition from European competitors and Chinese carmakers. to control factory, labor, product and material costs. Gunnar Kilian, head of human resources at Volkswagen, said in a statement that the series of measures were aimed at "reducing costs in Germany to a competitive level" in order to use the saved resources to invest in new technologies and products.

In response to Volkswagen's latest decision, Daniela Cavallo, Volkswagen's chief staff representative and union president, said: "We will fight fiercely against this historic attack on our work. As long as we are here, there will be no layoffs." This means that Volkswagen may face fierce opposition from trade unions, which in turn increases costs.

On September 2, Volkswagen of Germany issued a statement saying that in order to solve the problem of overcapacity and declining competitiveness, and to further cut costs, it would consider closing German factories, including a larger car factory and a parts factory, involving Volkswagen Group's major passenger car brands. It is understood that this will be the first time that Volkswagen has closed a factory in Germany since its establishment in 1926, and the closure and compulsory layoffs of local factories in Germany will be completed by 2026. However, as the world's second-largest auto group, Volkswagen's layoffs are clearly difficult to implement, with 650000 employees worldwide, nearly 300000 of them in Germany.

On September 4, Volkswagen CEO Obom, Chief Financial Officer Antritz and other senior executives held a staff meeting at Wolfsburg headquarters. "the European auto industry is in a very harsh and austere situation, the economic environment is becoming more severe, and new competitors are entering the European market," Obermu said. the cake is smaller, but there are more guests at the table. " At the same time, it stressed that "there are no more checks from China." In other words, Volkswagen's profits in the Chinese market have been upside down, it is difficult to provide Volkswagen with a considerable profit level.

The Chinese market is Volkswagen's largest market in the world, and Volkswagen's weak sales in China have brought great pressure. If we lose the Chinese market, the myth of Volkswagen will collapse, which is why Volkswagen is accelerating its efforts to dig deep into the Chinese market, while at the same time shutting down factories and forcing layoffs in the uncompetitive German market.

From 1990 to 2019, Volkswagen's annual sales increased from 3 million to 10.97 million. The Chinese market contributed 4.23 million vehicles, accounting for about 40% of the world's total sales, and has been the world's largest single market for many years in a row. From 1985 to 2023, Volkswagen occupied the first place in China's auto market, until the accelerated replacement of new energy vehicles (including plug-in) to pure fuel vehicles. Since the Xinguan outbreak, Volkswagen's sales in China have begun to decline, from 423 in 2019 to 385 in 2020 and then to 323 in 2023, a reduction of about 1 million vehicles in four years. After entering 2024, although Volkswagen joined a "price war" with Chinese automakers in the first half of the year, sales fell 7.4 per cent to just 1.35 million vehicles as its own brands accelerated to erode the joint venture market.

No matter Volkswagen or other automobile companies, factory closure and layoffs are the most effective and fastest way for enterprises to reduce costs and increase efficiency. Not only car manufacturers, including German car supply chain companies, are also pushing for layoffs, and some have even been overwhelmed to declare bankruptcy restructuring. As the second largest car company in the world, Volkswagen is not an old-fashioned and unenterprising company, but it is difficult for elephants to turn around, and it has to face short-term labor pains.

Welcome to subscribe to the WeChat public account "Automotive Industry Focus" to get the first-hand insider information on the automotive industry and talk about things in the automotive circle. Welcome to break the news! WeChat ID autoWechat