VW warns of plant closures in Germany

[Morris Minor]

A hot mess of red tape, nightmarish bureaucracy, unions, shitty governance, & bad management. The one guy who told it like it is, Herbert Diess, got shitcanned for his troubles.

https://www.cnbc.com/2024/09/02/volkswagen-warns-of-plant-closures-in-germany-amid-cost-cutting-drive.html

[veeman]

A nice interview on NPR on the matter:

https://www.npr.org/2024/09/04/nx-s1-5099461/german-automaker-volkswagen-considers-closing-two-plants-in-the-country#:~:text=Transcript-,Germany%27s%20largest%20industrial%20employer%2C%20Volkswagen%2C%20is%20reportedly%20considering%20closing%20at,to%20transition%20to%20electric%20vehicles.

Relied a lot on sales in China but Chinese companies now make good cars at a cheaper price point so they're getting squeezed out of China. Really slow to make EV cars. Audi design looks old. 

[r0tor]

China is subsidizing the crap out of domestic EVs and too many outside OEMs are caught with their hands in that now empty cookie jar.

[veeman]

BYD is building a 1 billion dollar EV factory in Turkey to sell their cars in Europe without European tariffs. BYD is also planning to build an EV factory in Hungary.

I don't think Europe will be smart enough to prevent cheaper EV cars from China flooding their markets.

[r0tor]

Stellantis is rebadging leapmotor China EVs for Europe.

[Morris Minor]

China is the world leader in EVs. All we have of any note is Tesla.

[Eye of the Tiger]

I wish we could get cheap, Chinese EVs in Bidenland.

[Morris Minor]

Perplexity sum-up of the latest on this. Things aren't getting any better.

"Volkswagen, Europe's largest automaker, is facing a significant crisis that may lead to unprecedented changes in its operations. For the first time in its 87-year history, the company is considering closing production sites in Germany[1][2]. This move comes as VW struggles to adapt to the changing automotive landscape, particularly the shift towards electric vehicles and increased competition from Chinese manufacturers.

## Planned Closures and Downsizing

Volkswagen intends to close at least three plants in Germany and downsize all remaining factories[1][4]. The closures could result in the loss of tens of thousands of jobs, with entire departments potentially being closed or relocated abroad[1]. The company's works council has indicated that every German VW facility would be impacted, with none of them being secure[4].

## Reasons for the Drastic Measures

Several factors have contributed to Volkswagen's decision to consider these drastic measures:

1. **Slow transition to electric vehicles**: VW, along with other German automakers, was slow to invest in electric vehicles and has struggled to catch up with competitors like Tesla and BYD[1].

2. **Declining sales**: Executives have noted that the company is selling 500,000 fewer vehicles annually in Europe compared to pre-pandemic figures[4].

3. **High operational costs**: Thomas Schaefer, CEO of Volkswagen passenger cars, stated that productivity levels at German facilities are insufficient, with operational costs being up to 50% higher than projected[4].

4. **Increased competition**: European and American manufacturers are facing heightened competition, particularly from Chinese electric vehicle producers known for their lower operational costs and superior profit margins[2].

## Potential Impact and Reactions

The proposed closures and job cuts have already met with resistance from labor unions[4]. Daniela Cavallo, chair of the works council, emphasized that they would mount "fierce resistance" against the proposed closures[2]. The situation is likely to lead to intense negotiations and possibly strikes in the near future.

## Broader Implications

These developments at Volkswagen highlight the challenges facing the European automotive industry as a whole. The transition from traditional combustion engines to electric vehicles, coupled with increased global competition, is forcing major restructuring efforts across the sector. The outcome of Volkswagen's plans could have significant implications for the German economy and the future of automotive manufacturing in Europe.

Citations:
[1] https://www.politico.eu/article/volkswagen-eyes-closure-three-german-plants-says-works-council/
[2] https://www.theguardian.com/business/article/2024/sep/02/volkswagen-vw-germany-plant-closures-cars-electric-vehicles
[3] https://www.bloomberg.com/news/articles/2024-10-28/vw-eyes-closing-three-german-factories-in-cost-cutting-push
[4] https://www.cnn.com/2024/10/28/business/volkswagen-factory-closures-layoffs/index.html
[5] https://www.theguardian.com/business/2024/oct/28/volkswagen-shut-three-factories-cut-thousands-jobs-union
[6] https://www.reuters.com/business/autos-transportation/volkswagen-plans-major-layoffs-shut-least-three-german-plants-works-council-head-2024-10-28/
[7] https://www.nytimes.com/2024/10/28/business/volkswagen-plant-closures-germany.html
[8] https://www.caranddriver.com/news/a62737852/volkswagen-financial-woes-german-plant-closures/
[9] https://www.reuters.com/business/autos-transportation/volkswagens-labour-chief-warns-mass-layoffs-plant-closures-germany-2024-10-28/"

[AutobahnSHO]

Funny that what made VW (and Honda, and Toyota at the beginning)- making small, CHEAP cars, is beyond the established manufacturers.

And China (or others???) is going to fill the gap.

Ford bit the bullet and started "off-shoring" already, Maverick and how many others are built in Mexico??... 

[giant_mtb]

Funny that what made VW (and Honda, and Toyota at the beginning)- making small, CHEAP cars, is beyond the established manufacturers.

And China (or others???) is going to fill the gap.

Ford bit the bullet and started "off-shoring" already, Maverick and how many others are built in Mexico??... 

My '05 Taco was built in America, '22 Taco was built in Mexico.

My buddy that worked at GM for a handful of years (dealing directly with warranty claims and thus factory/assembly issues) said that he saw far fewer issues with the GM vehicles being built in Mexico than the ones built in the States. As a generalization, the UAW workers are relatively lazy and entitled, the Mexican workers take pride in the opportunity and the work itself.

[Morris Minor]

My '05 Taco was built in America, '22 Taco was built in Mexico.

My buddy that worked at GM for a handful of years (dealing directly with warranty claims and thus factory/assembly issues) said that he saw far fewer issues with the GM vehicles being built in Mexico than the ones built in the States. As a generalization, the UAW workers are relatively lazy and entitled, the Mexican workers take pride in the opportunity and the work itself.

This is exactly my concern. I lived through the decline & fall of the British car industry and what's going on now directly mirrors that spectacle. I'm pro-EV, but governmenst never thought through whether the already-stultifying legacy auto manufacturers would be actually be capable of turning on a dime, setting aside a century of tradition, and flip to the new and alien business model of software and electric traction. I think Jim Farley at Ford gets it. Not sure the rest do.