Volkswagen: four plants in Germany may be closed, but the supervisory board has not yet made a decision

The Government of Lower Saxony, which holds 11.8 per cent of the share capital and 20 per cent of the voting rights, and which, together with the trade unions, has the power of veto, has also spoken out against “easy” solutions. The state’s Minister for Economic Affairs, Grant Hendrik Tonne, was particularly scathing: it is the board of directors’ responsibility to present a coherent, comprehensive plan; ‘this has not been the case so far, and that is why the uncertainty is palpable. It is disgraceful to treat people this way’.

However, the Porsche-Piëch family, which controls the group through the holding company Porsche Automobil, wants to get to the bottom of the matter and is putting considerable pressure on the managers. Blume, in fact, would also like to see a corporate reorganisation, which could reduce the state’s influence over future industrial decisions. Outside the Wolfsburg plant, Thorsten Gröger, a negotiator for IG Metall, stated: “Anyone who attacks the workers and co-determination runs the risk of triggering a major social conflict.”

The crisis is yet another major blow for Friedrich Merz’s government (just as it had been for that of his predecessor, Olaf Scholz). The Chancellor is already facing a crisis of support, as are the coalition parties he leads, the CDU-CSU and the SPD. By contrast, the far-right Alternative für Deutschland is soaring, capitalising on fears and frustration, even amongst workers.

According to data from Mobility Global, Volkswagen’s plants in Germany are operating at 81 per cent of their capacity and are set to fall to 73 per cent by the end of the decade. In 2026, Zwickau is the best-performing plant among the four at risk of closure, with a capacity utilisation rate of 88 per cent, although this is expected to fall to 42 per cent by 2030.

Blume’s aim is to raise the group’s operating margin to 9 per cent by 2030 – more than tripling the current level – whilst maintaining production at nine million cars by the end of the decade, but reducing production capacity from 10 million to 9 million. To this end, Volkswagen also aims to reduce investment from 180 to 135 billion euros over the period 2027–2031.

In its heyday, the German carmaker had around 670,000 employees and sold nearly eleven million vehicles a year. Those days are long gone. Operating profit has fallen from 22.6 billion to 8.9 billion euros in two years.

Various options are reportedly being considered for the four German sites, including a possible sale to defence sector companies. Such a possibility is already on the table for the Osnabrück plant in Lower Saxony, which is set to undergo restructuring scheduled for the end of 2024. Car production is expected to cease in 2027. According to ongoing negotiations, the plant could be acquired by the Israeli defence firm Rafael Advanced Defence Systems to produce equipment for use in the Iron Dome missile defence system. However, the conclusion of a contract is not yet in sight. And if no solution is found, the prospect of closure could resurface for Osnabrück too, which currently employs 2,000 people.

During the restructuring that took place almost two years ago, at Volkswagen AG in Germany alone (the main brand, the components division and commercial vehicles) had a ‘socially sustainable’ reduction of 35,000 jobs planned by 2030, without any plant closures (though with the sale of the Osnabrück plant and the conversion of the Zwickau plant) and without any redundancies. Worldwide, 50,000 redundancies had been planned, of which 37,000 have already been agreed.

The day after the supervisory board meeting, the group released its sales figures for the second quarter of 2026: sales were down 8.6 per cent year-on-year, following a 4 per cent decline in the first quarter. Over the first six months, sales fell by 6.3% to 4.125 million vehicles.

The slump in China was a key factor: sales fell by 36.6 per cent in the quarter and by 25.9 per cent in the first six months. Sales were also down in the Asia-Pacific region (-7.2%) and the Middle East and Africa (-1.9%).

The slump was partially offset by increased sales in Western Europe (+1.8 per cent), Central Europe (6.7 per cent), North America (7.7 per cent) and South America (9.4 per cent). Outside China, growth of around 2 per cent was recorded.

Globally, the biggest declines during the quarter were seen in Volkswagen (-14%), Audi (-8.2%), Bentley (-17.2%) and Porsche (-18.2%), whilst the Skoda (+4.8%), Lamborghini (+3.2%), Volkswagen Truck & Bus (+14.9%) and Scania (+6.7%) brands performed particularly well.

Sales of all-electric vehicles (BEVs) fell by 4.2% over the quarter and by 5.8% over the six-month period, with sharp declines across the board (US: -49% over the three months and -68.8% over the six months), except in Europe (+5.7% over the quarter, with orders up 50%, and +8.4% over the six-month period). However, the order book for fully electric vehicles in Europe increased by more than 50% overall.