Volkswagen Faces Factory Closures Amid Asian Competition Pressure

Volkswagen is considering closing factories in Germany in response to rising pressure from Asian competition, marking a significant clash between CEO Oliver Blume and the company’s powerful unions. The move signifies Volkswagen's struggle to stay competitive while transitioning to electric vehicles and managing economic challenges.

Volkswagen is contemplating factory closures in Germany for the first time as it grapples with increasing pressure from cheaper Asian competitors. This development signifies a major conflict between Chief Executive Oliver Blume and influential company unions, which have a history of blocking management decisions.

The company's works council has identified a large vehicle plant and a component factory as obsolete, vowing strong opposition to the executive board's plans. Lower Saxony, Volkswagen's second-largest shareholder, supports a review of potential closures, increasing tensions within the company.

Facing decreased competitiveness, a challenging economic environment, and aggressive Chinese automakers entering Europe, Volkswagen plans to cut costs by 10 billion euros by 2026. The decline in market value, particularly in China, its largest market, highlights the urgency for Volkswagen to innovate or risk further losses.

(With inputs from agencies.)