Volkswagen Caught Between Cost Pressure and Fear for Its Future

Volkswagen must move quickly through its cost-cutting program if it wants to improve its prospects, according to automotive economist Helena Beron Wisbert. The company faces pressure from competition, while workers fear for tens of thousands of jobs and entire factories.

“The savings programs we are now seeing at all automakers are unavoidable,” Beron Wisbert told the German Press Agency. She said Volkswagen needed to implement the measures quickly so it could return its focus to new models and technologies. After efforts to restore competitiveness in China, she said, the European market must not be neglected.

German automakers still dominate competition in Europe, according to Beron Wisbert, but their share of the electric-car market is also declining there. She said criticism from works councils and politicians was understandable, yet the company needed to reach an agreement on further savings within the next few months.

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The savings programs we are now seeing at all automakers are unavoidable.

Extraordinary staff meetings took place at several Volkswagen locations as employees demanded answers about the tougher savings drive. They fear tens of thousands of additional job losses and the possible closure of four sites: Emden, Zwickau, Audi’s plant in Neckarsulm and the commercial-vehicle facility in Hannover.

Volkswagen already plans to cut 50,000 jobs by 2030, but management says that reduction and the 20% cost savings achieved in its factories will not be enough. Chief Executive Oliver Blume said, “The situation is more than critical,” adding that the company makes a profit but not enough to finance its future. Beron Wisbert said another six to 12 months of uncertainty now lay ahead, while also criticizing the board’s earlier communication with employees.

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The situation is more than critical.