VW crisis sparks rural turmoil amidst closure fears in Germany

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 assesses that the crisis at Volkswagen could lead to problems in rural areas. "The current situation at VW is not only a major shock for all of Germany as a business location, but also especially for companies involved in supplying the automotive industry, most of which operate in rural areas," said the association's chairman, Achim Brötel (CDU), to newspapers in the Funke media group.

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

The dw.com service cites the results of a recent survey (conducted from 30 October to 1 November) of a representative group of 5,001 people. It shows that many people in Germany are sceptical about any potential state rescue of VW plants. In the survey conducted by the Civey agency for the web.de news portal, 61% of respondents opposed the idea of state intervention to prevent plant closures, while only 25% supported it.

Thomas Schaefer, who is responsible for the Volkswagen brand within 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 up to twice as costly as the competition.

In 2023, the group's profit totalled over £20 billion. However, according to "Die Zeit," "the VW Group is no longer selling as many cars as before the coronavirus pandemic." Moreover, the brand's vehicles are much less frequently purchased 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 prefer to buy from domestic manufacturers, partly due to price and better digitalisation, as noted by the newspaper.