Berlin. German automaker Volkswagen said Tuesday that the vehicle industry faces “headwinds,” a day after it said it cannot rule out plant closures in Germany and must abandon a 1994 job protection pledge that would have banned layoffs until 2029.
The company cited the entry of new competitors into European markets (such as cheap Chinese electric cars), the deterioration of Germany as a manufacturing site and the need to “act decisively” as factors driving its decision.
Thomas Schaefer, CEO of Volkswagen’s passenger car division, said cost-cutting measures were “paying off” but “headwinds have become significantly stronger.”
The discussion about closures and layoffs is about Volkswagen, the company’s main brand. That brand saw its operating profits decline from 1.64 billion euros in the same period last year to 966 million euros ($1.1 billion) this year.
In this regard, economist Veronika Grimm, a member of the committee that advises the German government and is known as the “Five Wise Men”, warned against public bailouts in companies that are in danger.
“The state should stay out of the way,” the expert told the Rheinische Post newspaper, referring to the crisis facing the Volkswagen carmaker.
“Plant closures are very likely. The automotive industry is undergoing a structural change,” said Grimm, a member of the officially named Council of German Economic Experts.
The advisor acknowledged that the State has a role to play in supporting such structural change. “But I do not believe that directly saving the automotive industry is the right way to go,” she said.
Meanwhile, union leaders at the brand have said they will wage a relentless battle against the plans.
Daniela Cavallo, who heads the Volkswagen works council, described the plans as an “attack on employment, jobs and collective agreements” in a special edition of the works council newspaper seen by DPA.
Trial for the “dieselgate” scandal
The criminal trial against former Volkswagen CEO Martin Winterkorn for his role in the “dieselgate” scandal began on Tuesday, nine years after the revelation plunged the carmaker into a serious crisis.
The former executive of Europe’s leading carmaker kept a low profile on his arrival at the court in Brunswick, northern Germany, where he merely told reporters that he was “doing quite well” and that his love of “nice cars” had guided his career at Volkswagen.
The German group admitted in 2015 that it had installed software to manipulate emissions levels in millions of vehicles around the world, triggering one of the biggest industrial scandals in the country’s recent history.
Winterkorn faces several charges, including fraud over the use of defeat devices, which made cars appear less polluting in laboratory tests than they were on the road. If convicted, he could be jailed for up to ten years.
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– 2024-09-07 12:31:47
