FRANKFURT, Germany -- FRANKFURT, Germany (AP) — Volkswagen is considering closing some factories in its home country for the first time in the German automaker's 87-year history, saying it otherwise won't meet the cost-cutting goals it needs to remain competitive. CEO Oliver Blume also told employees Wednesday that the company must end a three-decade-old job protection pledge that would have prohibited layoffs through 2029. The statements have stirred outrage among worker representatives and concern among German politicians.
Here are some things to know about the difficulties at one of the world’s best-known auto brands: Management says the company’s core brand that carries the company’s name needs to achieve 10 billion euros in cost savings by 2026. It recently became clear the Volkswagen Passenger Car division was not on track to do that after relying on retirements and voluntary buyouts to reduce the workforce in Germany. With Europe’s car market smaller than before the coronavirus pandemic, Volkswagen says it now has more factory capacity than it needs — and carrying underused assembly lines is expensive.
Chief Financial Officer Arno Antlitz explained it like this to 25,000 workers who gathered at the company’s Wolfsburg home base: Europeans are buying around 2 million cars per year fewer than they did before the pandemic in 2019, when sales reached 15.7 million. Since Volkswagen has roughly a quarter of the European market, that means “we are short of 500.