VW plans to close 3 German plants as auto industry turmoil grows

BERLIN — German car manufacturer Volkswagen is for the first time in its 87-year history planning to close production sites in its home market, the company’s works council said Monday.

The car giant, along with the rest of Germany’s once-vaunted auto industry, was slow to invest in electric vehicles and has struggled to catch up with the likes of U.S. rival Tesla and China’s BYD. 

Volkswagen intends to close at least three plants in Germany and downsize all remaining factories, the chairwoman of the works council, Daniela Cavallo, told employees in Wolfsburg. The closures could result in the loss of tens of thousands of jobs. Entire departments may be closed or relocated abroad.

Volkswagen last month canceled a 1994 agreement that protected its workers from layoffs until 2029, enabling business-related layoffs from mid-2025.

With sales in China declining almost 20 percent in the first half of 2024, Volkswagen — which is heavily invested in the Chinese market — is left with few options to make up for its monetary shortfall, making the plant closures an obvious target.

Volkswagen’s historic plant closures come as Germany’s gross domestic product is set to shrink for the second year in a row.

The country’s growing economic difficulties are likely to become a key issue ahead of a federal election scheduled less than a year from now.

German Chancellor Olaf Scholz, meanwhile, is preparing for an industry summit to be held at the chancellery on Tuesday, where he — together with labor union bosses and the chiefs of some of Germany’s biggest companies — is expected to come up with a plan to revamp the country’s economy.