The Volkswagen Group has been a pioneer in the development of China's automotive industry for 40 years and is now taking over a leading role in the new era of intelligent connected vehicles (ICV)
Strong foundation: With 39 plants, 90,000 employees and around 50 million customers who drive a Group brand vehicle today, Volkswagen is an integral part of the Chinese industrial ecosystem – and is harnessing the market's innovative power for the next technological leap forward
With a consistent 'In China, for China' approach, Volkswagen continues to drive localisation and strengthens the alignment of its products with the needs of Chinese customers
Volkswagen is expanding local development expertise and investing 2.5 billion EUR in its innovation hub in Hefei, Anhui Province, to further increase the pace of innovation in China
Investments also include the production of two Volkswagen brand vehicles, which are currently being developed jointly with Chinese manufacturer XPENG
Beijing. The Volkswagen Group has been a pioneer for individual mobility in China for 40 years. Today, Volkswagen's network in China features 39 plants, 90,000 employees and around 50 million customers who drive a Group brand vehicle. Together with its Joint Venture partners, Volkswagen is an integral part of China's industrial ecosystem and has created strong foundations. With its rapid transformation towards fully connected electric mobility, the Group is consistently realigning its activities in the region. Through the consistent implementation of its 'In China, for China' strategy.
Volkswagen is driving forward the localisation of development and aligning its products with changing customer needs. In the latest strategic milestone, Volkswagen is further expanding its production and innovation hub in Hefei, Anhui Province, with investments totaling 2.5 billion EUR. In addition to the expansion of R&D capacity, preparations are also being made for the production of two Volkswagen brand models, which are currently being developed together with Chinese partner XPENG. Production of the first model, an SUV in the mid-size segment, will begin as early as 2026.
'A very serious situation': Volkswagen could close plants in Germany for the first time in history
The Volkswagen Group headquarters in Wolfsburg, Germany, pictured in March 2024.
Krisztian Bocsi/Bloomberg/Getty Images
LondonCNN —
Volkswagen is weighing whether to close factories in Germany for the first time in its 87-year history as it moves to deepen cost cuts amid rising competition from China’s electric vehicle makers.
In a statement Monday, the German automaker, one of the world’s biggest car companies, said that it could not rule out plant closures its home country. Other measures to “future-proof” the company include trying to terminate an employment protection agreement with labor unions, which has been in place since 1994.
“The European automotive industry is in a very demanding and serious situation,” said Volkswagen Group CEO Oliver Blume. “The economic environment became even tougher, and new competitors are entering the European market. Germany in particular as a manufacturing location is falling further behind in terms of competitiveness.
Volkswagen, which embarked on a €10 billion ($11.1 billion) cost-cutting effort late last year, is losing market share in China, its single biggest market. In the first half of the year, deliveries to customers in that country slipped 7% on the same period in 2023. Group operating profit tumbled 11.4% to €10.1 billion ($11.2 billion).
The lackluster performance in China comes as the company loses out to local EV brands, notably BYD, which also pose an increasing threat to its business in Europe.
“Our main area of action is cost cutting,” Blume told analysts on an earnings call last month, citing planned reductions to factory, supply chain and labor expenses. “We have done all the organizational steps needed. And now it is about costs, costs and costs,” he added.
Volkswagen’s cost-cutting plans will face heavy resistance from labor representatives, which hold almost half the seats on the company’s supervisory board, the body that appoints executive managers.
IG Metall, one of Germany’s most powerful unions, on Monday blamed mismanagement for the firm’s shortcomings and vowed to fight to protect jobs.
“Today, the board presented an irresponsible plan that shakes the very foundations of Volkswagen, massively threatening jobs and locations,” IG Metall lead negotiator Thorsten Groeger said in a statement.
“This approach is not only short-sighted but also highly dangerous — it risks destroying the heart of Volkswagen… We will not tolerate plans that the company makes at the expense of the workforce.”
Volkswagen employs almost 683,000 workers worldwide, including some 295,000 in Germany, according to its most recent earnings report.
Thomas Schaefer, the CEO of Volkswagen passenger cars, said the company remains committed to Germany “as a business location.” He added that VW would initiate talks with employee representatives urgently to explore possibilities for “sustainably restructuring the brand.”
“The situation is extremely tense and cannot be resolved through simple cost-cutting measures,” Volkswagen said.
