ALBAWABA - In order to "future-proof" the firm against growing rivalry from Chinese electric car manufacturers, German automaker Volkswagen has said that it cannot rule out the possibility of plant closures in its home country due to difficulties in the automotive sector.
Further measures include the elimination of a long-standing job preservation guarantee that has been in effect since 1994 and would have prohibited layoffs until the year 2029, Volkswagen said in a statement.
In a statement, Volkswagen said that the firm's brands will be required to undergo a "comprehensive restructuring." The company went on to say that the present scenario implies that even plant closures at vehicle manufacturing and component locations can no longer be ruled out.
Should there be any closures, it would be the first time in the 87-year history of the company in Germany. Following the announcement, Volkswagen shares concluded the day 1.3% higher, bringing their losses for the year to a total of 13%, according to Bloomberg
Oliver Blume, the Chief Executive Officer of Volkswagen Group, issued a statement on Monday stating that the European automotive sector is now facing a scenario that is both difficult and severe.
“The situation is extremely tense and cannot be resolved through simple cost-cutting measures,” Blume stated, adding that “We want to initiate discussions with employee representatives as soon as possible to explore the possibilities for sustainably restructuring the brand.”
“The economic environment became even tougher, and new competitors are entering the European market. In addition, Germany in particular as a manufacturing location is falling further behind in terms of competitiveness,” Blume noted.
