Volkswagen continues to search for a solution to the worst crisis in its history applying the same old recipes: closing factories and laying off staff. Volkswagen is thus preparing for something never seen before in the group, cancelling long-standing labour security agreements and its willingness to close a factory in Germany, as well as the Audi factory in Belgium.
Unions have ruled out plant closures, leaving the question of where savings will come from without job cuts. “I expect to see significant movement to move forward on the cost side,” Blume told broadcaster RTL/ntv.Labor costs at Volkswagen are too high compared to international competition.”
Overcapacity and protectionist measures
Volkswagen Group Chief Executive Oliver Blume expects unions to make proposals on how to cut costs and close the gap with competitors, two days before talks on plant closures and new wage deals.
It is true that wage costs are generally much higher in Germany than in the rest of the European Union. In 2023, the cost of labour in German industry was 46 euros per hourwhile it was 44 euros per hour in France and only 25.9 euros in Spain. They are also a lot higher than in Chinawhere it is not unusual nowadays to have figures of four euros per hourwhen in 2020 was 6 euros per hour.
But it is not just a question of manpower, but of costs in general, in addition to some strategic errors in the past, such as doubling investments to have two separate platforms for its cars (electric and gasoline) and overproduction capacity.
Take the Emden plant, which produces the Volkswagen ID.4 and ID.5 as well as the new ID.7, for example. This factory has a capacity of up to 300,000 electric cars per year and plans to produce 140,000 cars by 2024. With three different models, this is less than 50% of its capacity. And a car factory is profitable when it operates at more than 80% of its capacity.
While the entire industry, including China, steps on the accelerator of Hybrid cars and PHEVsVolkswagen lacks hybrids and its cars are too expensive. It has been enough to lower the price of the Volkswagen Golf to see how was once again among the bestsellers from Europe.
In fact, the Volkswagen brand has been struggling with high costs for years and is lagging far behind Group brands such as Skoda, Seat and Audi in terms of profitability. And the Volkswagen brand is holding back the rest of the Group.
On the other hand, during the automotive summit held yesterday at the Federal Ministry of Economics, and in view of the weak sales figures for electric cars, Blume suggested link the new ones premiums for the purchase of electric cars based on the CO₂ footprint of their manufactureto penalise in particular vehicles from China. Volkswagen, traditionally opposed to tariffs, is now calling for a barely concealed protectionist measure.
It is a measure that France has already applied with some success. China now accounts for only 3% of total automotive imports in France, compared to 5% in the first half of 2023. After falling from twentieth to seventh place among exporting countries to France between 2021 and 2023, it fell back to sixteenth place in the first half of 2024. In just six months, it has lost almost ten positions.
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Source: www.motorpasion.com
