German Government Seeks to Prevent VW Plant Closures

The German government intends to prevent the closure of Volkswagen's domestic plants, but a cabinet spokesperson said on Monday that the final decision rests with the company. Europe's largest automaker is under mounting pressure from Chinese competition, US tariffs and weak demand across Europe.

According to sources, Volkswagen is considering cutting up to 100,000 jobs and closing four factories in Germany. Such a move would deal another major blow to Germany's stagnating economy and create further challenges for the governing coalition.

The government spokesperson said maintaining the profitability of German operations depends on creating the right framework conditions, including investment incentives and competitive policies. However, any restructuring plans are expected to face strong opposition from labour unions and the state of Lower Saxony, Volkswagen's second-largest shareholder. The federal government does not hold a direct stake in the company.

Management's proposals are due to be discussed at a supervisory board meeting on July 9, attended by employee representatives. So far, executives have told unions that the cost-cutting measures implemented to date are insufficient but have not yet disclosed the full scale of any additional job cuts.

(Reuters, Max)