Volkswagen's Crossroad: Cost Cuts and Electric Dreams

Volkswagen is under pressure to turn its main car brand around within a year or two, amidst Europe's shrinking car market and growing competition. The automaker faces staff opposition to deep cost-cutting measures, including possible German plant closures. The company's strategy pivots on cutting spending to survive the shift to electric vehicles, a move critical for its financial future.

Volkswagen has one, maybe two, years to turn its main car brand around, according to the automaker's finance chief, Arno Antlitz. At a tense meeting, he implored workers to back plans for significant cost cuts, which might include German plant closures, crucial for the brand's survival amid the shift to electric vehicles.

Addressing 21,000 workers in total, Antlitz highlighted the post-pandemic shrinkage in Europe's car market, causing a demand shortfall of approximately 500,000 cars. He indicated this could force the closure of two plants and stressed the need for immediate spending cuts and production adjustments.

However, works council chief Daniela Cavallo criticized management for damaging trust and urged a wider discussion on spending priorities. The threat of plant closures has raised concerns for Germany's economy, with Chancellor Olaf Scholz prioritizing Volkswagen in efforts to boost EV demand and preserve jobs.

(With inputs from agencies.)