Germany’s government said Monday it wants to prevent factory closures at Volkswagen as Europe’s largest automaker considers sweeping restructuring measures that could include shutting production sites and eliminating thousands of additional jobs to cope with growing competitive pressures.
A government spokesperson said Berlin’s objective is to preserve Volkswagen’s manufacturing footprint in Germany but emphasized that any final decision on plant closures ultimately rests with the company.
“Our aim is to prevent the closure of sites in Germany,” the spokesperson said. He added that maintaining domestic production would require the right economic conditions, including stronger competitiveness and incentives that allow manufacturing facilities to remain profitable.
“However, it is always up to the companies to make these decisions on commercial grounds,” the spokesperson said.
The comments followed reports that Volkswagen is evaluating the closure of four factories in Germany while expanding previously announced workforce reductions to as many as 100,000 jobs. Two people familiar with the matter told Reuters the proposals are being considered as the company responds to intensifying competition from Chinese automakers, U.S. tariffs and weakening demand across the European automotive market.
Volkswagen has not publicly confirmed the reported plans.
Any factory closures would represent one of the most significant restructuring efforts in the company’s history and could complicate the German government’s broader strategy to revive Europe’s largest economy, which has struggled with sluggish growth and declining industrial output.
The proposed measures are also expected to face fierce resistance from labor unions and the government of Lower Saxony, Volkswagen’s second-largest shareholder. While the federal government does not own a stake in the Wolfsburg-based automaker, Lower Saxony has long played a significant role in the company’s governance through its shareholding and representation on the supervisory board.
According to the Reuters report, Volkswagen’s supervisory board, which includes employee representatives, is expected to discuss the restructuring proposals at a meeting scheduled for July 9.
Management has already informed employees that previously agreed job reductions will not be sufficient to meet the company’s financial objectives, according to a works council document reviewed by Reuters. The document indicated further workforce cuts are expected, although executives have not yet specified the total number of additional positions that could be eliminated.
Volkswagen has been under increasing pressure to reduce costs as European manufacturers face slowing electric vehicle demand, persistent inflationary pressures and growing competition from lower-cost Chinese brands that have rapidly expanded both domestic production and exports.
The automaker has also been adapting to changing global trade conditions, including tariffs affecting international vehicle shipments, while investing heavily in electric vehicle technology and software development.
For Germany, any large-scale downsizing at Volkswagen would have implications extending well beyond the automotive sector. The company remains one of the country’s largest private employers, with its manufacturing network supporting thousands of suppliers and regional economies across Germany.
The outcome of next month’s supervisory board meeting is expected to provide the clearest indication yet of how aggressively Volkswagen intends to reshape its operations as it navigates one of the most challenging periods in the European automotive industry’s recent history.
