Kai Grünitz, Olaf Lies, Robert Müller, Jörg Tegeler, and Martin Sander at the handover of the 1.5 million ID. model in Emden. Copyright: Volkswagen AG.
Volkswagen Group is in turmoil, due largely to increased sales of Chinese-made cars in European markets. The company has uttered dark warnings about closing factories in Europe for several years. CFO Arno Antlitz said at a conference hosted by Goldman Sachs in London on December 5, 2024, that Volkswagen Group needed to take “decisive action” at its German factories to return them to full operating capacity.
“Our aim is for our factories to be humming with activity,” he said. “The alternative is highly detrimental. Each underutilized factory gradually bleeds out, becoming inefficient and continuously losing competitiveness.” Over the past two decades, some Volkswagen factories in Europe have been operating at less than 60 percent of capacity, with an estimated unused capacity of as much as 800,000 units.
Meeting The Challenge From China
By now it is common knowledge that it is far cheaper to manufacture automobiles in Asia — and particularly China — than it is in Europe. Virtually every factory in China is relatively new while many in Europe have been cranking out automobiles for generations. Over time, European labor unions have been quite successful at raising the standard of living for its members by negotiating increases in wages and benefits.
