Volkswagen Considers German Plant Closures & BYD Makes Moves

As the adoption of electric vehicles (EV) increases and the popularity of Chinese brands grows, other automakers are feeling the heat.

Rivals such as BYD and others have enabled customers to purchase EVs at lower prices, creating a problem for 87-year-old Volkswagen Group.

The company that owns brands such as Škoda, Audi, Seat, Lamborghini, Bentley, Porsche, Ducati and more is facing stiff competition from cost-efficient BYD vehicles. This has led to the company having to endure dire consequences, especially for its historic German plants.

So, what did the automaker say about its factories in Germany? Let’s explore!

What Did Volkswagen Say About Its German Plant?

“The European automobile industry currently finds itself in a challenging and serious position. The economic environment has worsened and new competitors are pushing towards Europe. Germany is falling behind as a competitive location. As a company, we have to act,” said Oliver Blume, the CEO of Volkswagen Group.
Addressing the growing competition from Asian carmakers, Blume conveyed that the company couldn’t rule out factory closures in Germany for the first time in its 87-year history.
This includes one large vehicle plant and one component factory in Germany.
The move comes as the company is looking to cut back an additional €4 billion ($4.25 billion) over its originally planned amount in a sweeping savings plan.
Furthermore, VW revealed that it would be ending its job security plan which has been in effect since 1994 and prevents layoffs until 2029, affecting over 680,000 employees.
According to top German industrial union IG Metall, the plan covers Volkswagen plants in Wolfsburg, Hanover, Braunschweig, Salzgitter, Kassel and Emden.
The company’s board also said that its strategy to offer reduced contracts and severance packages to workers nearing retirement was no longer sufficient to meet its targets.
Ahead of this, the company is expected to outline its plans in front of 18,000 employees in a town hall meeting in Wolfsburg on Wednesday, September 4.
The move did not go down well with trade unions, including Volkswagen’s General Works Council, which would “fight bitterly” against plant closures, as well as IG Metall, which said the plan “shakes the foundations of Volkswagen and poses a massive threat to jobs and locations.”
Thomas Schäfer, the CEO of the VW brand said, “The situation is extremely tense and cannot be resolved through simple cost-cutting measures. This is why we want to initiate discussions with employee representatives as soon as possible to explore the possibilities for sustainably restructuring the brand.”
Schäfer added, “The headwind has grown stronger. So, we have to push even harder to create the conditions for long-term success.”

TechDogs-"An Image Of Volkswagen's Wolfsburg Factory"

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Volkswagen’s move adds to a previous consideration it had of closing an Audi factory in Belgium, despite Audi, Škoda and Seat outperforming Volkswagen's eponymous brand.

On the other hand, Chinese automaker BYD sold a record 373,083 cars in August, including 148,470 passenger BEVs (Battery Electric Vehicles - up 1.95% YOY), 222,384 PHEVs (Plug-in Hybrid Electric Vehicles - up 73.12% YOY) and 373,083 NEVs (New Energy Vehicle - up 35.31% YOY).

Among other recent moves, BYD also announced a new agreement with leading European mobility enabler Hedin Mobility Group.

What Is The BYD And Hedin Mobility Group Agreement About?

According to a news release published on its website, Hedin Mobility Group announced that it has reached an agreement with BYD for the sale of Hedin’s subsidiary Hedin Electric Mobility GmbH, where the purchaser will be BYD Automotive GmbH.
The subsidiary serves as the appointed “Dealer+” of BYD vehicles and spare parts in the German market.
Hedin Mobility Group represents 45 brands across 14 countries in Europe, possesses over 800 sales points and more than 330 dealerships with 12,500+ employees.
As part of the transaction, BYD will also receive two pioneer stores in Stuttgart and Frankfurt which are operated by Hedin Mobility Group’s German retail division.
Hedin Automotive eMobility will continue to serve as an authorized retailer of BYD in Germany with three sales points in Mannheim, Kaiserslautern and Saarbrücken, as well as Dealer+ and a retailer in the Swedish market.
The agreement is subject to regulatory approval and closing and is expected to conclude in Q4 2024.
Stella Li, the Executive VP of BYD Company Ltd., said, “BYD is committed to fostering strong long-term partnerships. The existing partnerships with the German retailers will continue. Together with its retail partners, BYD will further extend outstanding customer services and warranty support in Germany.”
Anders Hedin, the CEO and Founder of Hedin Mobility Group, said, "Over the past two years, we have worked with BYD to develop the German market. The foundation is now in place to scale up volumes, and we look forward to continuing this journey in Germany together with BYD as a dealer.”

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Do you think BYD’s dominance along with other Chinese automobile companies will affect other automakers? Do you think Volkswagen will be forced to shut its German plant and might consider further closures?

Let us know in the comments below!

First published on Wed, Sep 4, 2024

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