Volkswagen may not finally close German plants

However, nothing is certain as both Piech and the Porsche family are said to support aggressive cost-cutting measures

Volkswagen has been threatening to close factories in Germany for months as it seeks ways to cut costs and improve its financial position. However, the company’s supervisory board is currently considering the possibility of making it public, which would undoubtedly be welcomed by employees and local unions.

If Volkswagen closes its factories in Germany, it would mark the first time in the company’s history that it has taken such drastic measures. The company faces increasing competition from new brands entering the European market, especially from Chinese automakers, a situation that “cannot be solved by simple cost-cutting measures,” Volkswagen brand chief Thomas Schaefer said. Unions and Volkswagen have been at loggerheads for the past three months over what measures are needed to cut costs.

Read: Volkswagen workers strike at 9 plants, oppose 10% pay cut and plant closures

According to German magazine Manager Magazin, Volkswagen board members have been seeking to end production at the company’s Dresden plant, which currently employs 300 people. They are also studying the sale of the Osnabrück plant, which employs 2,300 people. However, unnamed sources said the board was not in favor of closing the plants and no potential buyer had been identified for the Osnabrück plant.

The future of the plants is not guaranteed at this stage as disagreements are said to remain between some board members. Reuters has learned that Piech and the Porsche family favor more aggressive cost-cutting measures.

The Osnabrück plant currently produces the Porsche Cayman, Boxster and T-Roc Cabrio. Although the plant has an annual production capacity of 100,000 vehicles, it produced only 28,000 vehicles last year. Production of the T-Roc Cabriolet is also scheduled to end next year, and Porsche is moving Cayman and Boxster production to its plant in Zuffenhausen. Volkswagen’s Dresden plant currently produces the ID.3.

In early December, nearly 100,000 Volkswagen workers across Germany went on strike to protest against proposed extreme cost-cutting measures. The IG Metall union has offered to waive bonuses for 2025 and 2026 and proposed using funds from wage increases to fund temporary reductions in working hours during periods of overcapacity. The company said the measures could result in cost savings of 1.5 billion euros ($1.6 billion).