A VW Golf GTI stands in a parking lot within sight of the brand’s tower on the grounds of the VW plant in Wolfsburg.
Wedding Ring Photo | Alliance Photo | Getty Images
German car manufacturer Volkswagen The German carmaker warned on Monday that it could no longer rule out plant closures in the country, raising the specter of major cost-cutting measures to “sustain” the company.
“The European automotive industry is in a very demanding and serious situation,” Volkswagen Group CEO Oliver Blume said in a statement.
“The economic environment has become even more difficult and new competitors are entering the European market. In addition, Germany in particular as a production location is losing even more competitiveness.”
As a result, the Volkswagen Group CEO said the company “must now act decisively.”
Volkswagen shares rose 2.4 percent on Monday afternoon.
Volkswagen said brands within the company would undergo a “complete restructuring”, before adding that the current situation means that even plant closures at vehicle and component production sites can no longer be ruled out.
The automaker said it felt compelled to end its job protection agreement – a job security program in place since 1994 – in order to achieve “urgent structural adjustments for greater short-term competitiveness.”
“The situation is extremely tense and cannot be resolved by simple cost-cutting measures,” VW brand CEO Thomas Schäfer said in the statement.
“This is why we want to start discussions with employee representatives as soon as possible to explore the possibilities of sustainably restructuring the brand,” he added.
Volkswagen said all necessary measures would be discussed with the general works council and the German union IG Metall.
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