Chinese rivals present 'serious situation' that could cause Volkswagen to close its factory doors for the first time

Volkswagen has warned that an unprecedented increase in competitiveness from Chinese brands could force the closure of its German production facilities for the first time in the history of the company.

A statement from Volkswagen overnight cited economic pressures and the high costs associated with manufacturing in Germany as challenging moving forward.

“The European automotive industry is in a very demanding and serious situation,” said Volkswagen Group CEO Oliver Blume. 

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“The economic environment became even tougher, and new competitors are entering the European market. Germany in particular as a manufacturing location is falling further behind in terms of competitiveness.”  

The statement comes after Volkswagen had already gone to great lengths to cut costs in 2023, but has found the emergence of Chinese brands difficult to compete with especially in China. Now more cost cutting is being proposed.

“Our main area of action is cost cutting,” Blume said. “We have done all the organisational steps needed. And now it is about costs, costs and costs,” he added. 

Volkswagen has almost 300,000 employees in Germany and there are fears that job losses are inevitable if the company restructures.  

Volkswagen ID.Buzz GTX

Germany’s largest IG Metall says Volkswagen’s workers at plants in Wolfsburg, Hanover, Braunschweig, Salzgitter, Kassel and Emden could be affected.

The Wolfsburg site is the location of Volkswagen’s headquarters and largest plant that makes the Golf and Tiguan. The Hanover plant makes the Transporter van and Multivan people mover along with the new fully electric ID.Buzz retro-inspired Kombi, while the Emden factory produces the Passat and ID.4.

In Australia the rise of Chinese brands here such as BYD, MG and GWM are presenting a growing challenge for some more established car makers with cheap entry points into electric vehicles.

Volkswagen is poised to launch an array of electric cars in Australia during the next 12 months starting with the ID.4 and ID.5 SUVs in December, and the ID.Buzz will also make its debut before Christmas, too. Then in 2025 the high-performance ID.Buzz GTX will launch followed by the equally sporty ID.4 GTX and ID.5 GTX variants.