Volkswagen Faces Potential Factory Closures Amid Economic Struggles

Volkswagen is considering closing factories in Germany due to mounting price pressures from Asian rivals. This significant development underlines the challenges facing CEO Oliver Blume, unions, and Germany's economy. The company aims to cut costs substantially by 2026 to adapt to the competitive landscape of electric vehicles.

Volkswagen is contemplating the shutdown of factories in Germany, reflecting the escalating price pressures Europe's leading automaker encounters from Asian competitors. This move marks the first major conflict between Chief Executive Oliver Blume, known for his consensus-building approach, and Volkswagen's influential unions.

The company's works council identified a large vehicle plant and a component factory in Germany as outdated. CFO Arno Antlitz and Volkswagen brand chief Thomas Schaefer are scheduled to address employees at a works council meeting on Wednesday, where tensions are expected to be high.

Volkswagen's works council head, Daniela Cavallo, anticipates difficult negotiations, especially given the union's history of resisting drastic changes. Past CEO Herbert Diess faced similar resistance, culminating in his departure in 2022. Analysts have previously pointed to sites in Osnabrueck and Dresden as potential closure targets.

(With inputs from agencies.)