VW crisis threatens supply chain and rural Germany's future

To recap: Volkswagen plans to close at least three factories in Germany, lay off tens of thousands of employees, and scale down operations at other facilities in Europe's largest economy.

The German Association of Districts and Municipalities believes that the crisis at Volkswagen could lead to problems in rural areas. "Current events at VW are not only a real shock for all of Germany," said the association's chairman Achim Brötel (CDU) to newspapers in the Funke media group, "but also especially for companies involved in supplying the automotive industry, most of which operate in rural areas."

He added that the anticipated cuts at VW raise significant concern. "It also concerns many jobs in rural areas, tax revenues, and, most importantly, concrete future prospects for many people and their families," emphasized Brötel.

The dw.com service references a recent survey conducted between October 30 and November 1 on a representative group of 5,001 people. The survey indicates that many people in Germany oppose any potential state rescue of VW plants. Conducted by the Civey agency for the web.de news portal, the survey found that 61% of respondents rejected the idea of state intervention to prevent the plant closures, and only 25% supported it.

Thomas Schaefer, responsible for the Volkswagen brand in the group, which includes Audi, Seat, and Skoda, admitted a few days ago that "German factories were not productive enough and exceeded target costs by 25-50%." This means some facilities were twice as costly compared to the competition.

In 2023, the group's profit amounted to over 32 billion Canadian dollars. However, according to "Die Zeit," "the VW Group is no longer selling as many cars as it did before the coronavirus pandemic." Moreover, the brand's vehicles are purchased much less frequently than sister brands like Skoda or Cupra, also part of the group.

Volkswagen is selling fewer and fewer vehicles with combustion engines, especially in China. There, the transition to e-mobility is progressing significantly faster than in Europe, and the Chinese tend to prefer domestic manufacturers, partly due to pricing and better digitalization, according to the newspaper.