Volkswagen has reduced production capacities in Kini for one million cars per year, while in Europe, primarily in the Volkswagen and Audi brands, an additional reduction should be implemented by 2028.
CEO Oliver Blume, who is at the helm of Volkswagen from 2022, said that "overcapacity is not sustainable for the company in the long term," and that "in today's market and competitive situation, the volume planning of the past is unrealistic."
Speaking to Manager magazine, Blume emphasized that Volkswagen is making "advances in reducing factory costs that have not been seen before in the company," but that excess capacity is still a huge financial burden.
He reminds that since the coronavirus pandemic car sales drastically reduced everywhere in the world. Around 11 million cars were sold in 2019, while now around nine million are sold annually.
What hurts the German car industry
Volkswagen lacks customers. The appearance of Chinese cars on in German market, and the sudden return of German exports to China is the hardest blow this giant has received in recent decades. Low prices and solid quality have opened the way for Chinese manufacturers to Europe and ensured dominance of the domestic market.
Photo: Hendrik Schmidt/dpa via APThe German car industry has been struggling with problems for years
Eurostat states that German vehicle exports to China have fallen by two-thirds from 2022.
As early as 2023, Volkswagen launched an "efficiency program" to reduce costs and remain competitive in the market. However, the crisis is only deepening.
Their profit last year was halved compared to the previous year. In an attempt to repair the damage, as many as 50,000 jobs were cut in March.
Other challenges in the global market, such as Donald Trump's tariffs on US car imports, as well as the current situation in the Middle East, are further worsening an already bad situation.
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