Volkswagen’s day of reckoning: four factories in Germany could close from 2031

According to data from Mobility Global, VW’s plants in Germany are currently 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. To this end, Volkswagen also aims to reduce investment from 180 to 135 billion euros over the period 2027–2031.

In its heyday, VW had around 670,000 employees and produced nearly eleven million vehicles a year. Those days are long gone now, as Blume reiterated to shareholders at the annual general meeting in June. The group’s profit margin has fallen to its lowest level since the start of the ‘dieselgate’ scandal, and the number of cars produced has not returned to pre-pandemic levels.

The strategy involves transferring production of certain models from German plants to facilities in Eastern Europe, such as Bratislava (Slovakia) and Győr (Hungary), where costs are lower.

Alternative options are reportedly being considered for the German sites, including a possible sale to companies in the defence sector. Such a possibility is already on the table for the Osnabrück plant in Lower Saxony, which is set to be affected by the restructuring already planned by VW for the end of 2024. 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.

When the first cost-saving programme was launched at the end of 2024, the focus was primarily on the main Volkswagen brand. In addition to the brand itself, VW AG also comprises the commercial vehicles division, the components division and a large part of the group’s administration. Even then, the objective was clear: 35,000 fewer jobs by 2030, most of which have already been achieved, without any plant closures (though with the sale of the Osnabrück plant and the conversion of the Zwickau plant) and without redundancies, but through agreed departures. Worldwide, 50,000 job cuts had originally been forecast, a figure that could now rise to 100,000.