Volkswagen May Close Two German Plants, Union Angrily Criticizes 'Shaking the Foundation', Stock Price Rises 1.25% Against the Trend!

According to the CCTV news channel reported on September 3, Volkswagen Group solemnly announced on September 2 local time that it is carefully evaluating the possibility of closing a vehicle manufacturing plant and a parts plant in Germany for the first time. The move, if implemented, would be the first time in Volkswagen's history that it has closed a plant in Germany. Foreign media reported that once the news was disclosed, it was immediately resolutely opposed by the trade union, Germany's top industrial federation IG Metall expressed severe criticism of the plan, arguing that it "shakes the foundation of the automaker." "The European automotive industry is facing a serious and urgent situation," Volkswagen Group Chief Executive Oliver Blum said in a written statement. Mr Bloom stressed: "The economic environment is becoming increasingly difficult and new competitors are constantly entering the European market. In particular, Germany, a manufacturing base, is falling behind in terms of competitiveness. Therefore, the leadership of the Volkswagen Group believes that decisive measures must be taken now. Volkswagen Group said its brands would face a "comprehensive restructuring" and made clear that the current situation meant the closure of vehicle production and parts plants could not be ruled out.

In the face of the severe situation, Volkswagen brand CEO Thomas Schaefer issued a statement, clearly stated: "The current situation is extremely serious, and simple cost-cutting measures alone can no longer cope." To this end, it is imperative that we start a dialogue with employee representatives to explore ways to restructure the brand sustainably." The carmaker also announced that it would have to end the employment protection agreement - a job security scheme that has been in place since 1994 - in order to achieve "urgently needed structural adjustments to boost competitiveness in the short term". A spokesman for the German finance Ministry did not respond to a request for comment. The Volkswagen Group said it would hold in-depth discussions with the plant's staff council and IG Metall on all necessary measures. However, both groups were quick to condemn the proposals. "The plan presented by the board today lacks responsibility, shakes the foundations of Volkswagen and poses a huge threat to jobs and plant locations," IG Metall regional manager Thorstein Grog said in a statement. "This approach is not only shortsighted, it is dangerous - it has the potential to destroy VW at its core," Mr Grog added. Meanwhile, Danila Cavallo, head of the VW factory workers' council, vowed that the group would "resolutely oppose" the board's proposal, noting: "The board has failed." The result is an attack on our jobs, our factory sites and our collective agreements."

During Monday's trading session, Volkswagen AG's shares closed up 1.25%, effectively making up for some of the losses of the previous session. According to the latest financial report released by Volkswagen, due to the pressure of rising costs, the operating profit margin in the second quarter fell to 6.6%, slightly lower than the 7% in the same period last year, but the result has exceeded the market consensus of 4.19%. Notably, the operating margin of Volkswagen's core brands fell to 5% in the second quarter, down from 9.2% in the same period last year and missing analysts' expectations of a range of 6.5% to 7%. Nevertheless, revenue in the second quarter increased by 4.1% year-on-year to €83.34 billion, beating market expectations of €81.92 billion. However, for the full year revenue growth forecast, the company said it will not exceed 5%.

In the Chinese market, the Volkswagen Group is actively involved in price adjustments, but in the second quarter, its deliveries in the Chinese market still showed a 19% decline. In this regard, Mr. Arno Antlitz, Chief Financial Officer of Volkswagen Group, clearly pointed out that in order to achieve the established targets for the year, the group must take unprecedented cost reduction measures in the second half of the year and in the future period. At the same time, the Volkswagen Group is pushing ahead with a savings plan of up to 10 billion euros, which is expected to help the group achieve cost savings of about 4 billion euros by 2024.