Volkswagen Restructures: €4 Billion Plan Targets Costs And Overcapacity

Since the Dieselgate scandal, Volkswagen has faced an unprecedented crisis that has forced it to take drastic measures to cut operating costs. Thomas Schafer, chief executive of the German brand, confirmed that the closure of several plants in Germany is inevitable, stressing that the move will also lead to layoffs. The decision comes amid a €4 billion cost-cutting plan and is considered a first in the brand's 87-year history.

Schafer emphasized the necessity of restructuring to confront the competition, stressing the urgency of addressing overcapacity and high costs.

"We cannot simply apply a temporary solution and continue. That would significantly increase our long-term costs," according to Schafer. The Volkswagen chief also stated that offering early retirements to affected employees was insufficient, as this process would delay restructuring until 2035, leaving the company vulnerable to competition. Unions and employees at the German plants reacted vehemently to the announcement. Volkswagen's decision nullifies a 1990s agreement that ensured job security until 2029.

Negotiations between the parties have been tense, and unions are threatening strikes in December if their demands are not met. Thomas Schafer explained that plants in Germany have production costs almost double those in eastern and southern Europe, making restructuring inevitable.

"There is no point in delaying the changes. Restructuring must be completed within the next 3-4 years," he emphasized. It remains to be seen how things will evolve, but the tough decisions by Volkswagen's management mark a critical moment in the history of one of the world's biggest car companies.