solare Volkswagen’s Woes Reflect a Stagnant German Economy
No industry is more important to the German economy than automobiles. And no carmaker is more important than Volkswagen.
Now, as the 87-year-old automaker is floating the prospect of job cuts and factory closures as it seeks to return to profitability, Volkswagen’s struggles are being reflected in the overall troubles facing the country, which is grappling with a shrinking industrial sector and an economy that is forecast to contract for a second consecutive year.
“The fact that Volkswagen, Germany’s largest car manufacturer, largest industrial employer and the world’s No. 2 behind Japanese carmaker Toyota, is no longer ruling out plant closures and compulsory redundancies shows how deep the German industry is now in crisis,” said Carsten Brzeski, chief economist at ING Germany.
The issues dragging on profitability at Volkswagen’s core brand — high-priced labor, cumbersome organizational structures and an inability to keep up with advances by Chinese automakers — mirror those facing Germany’s overall economy.
On Monday, the German government said the economy would contract 0.2 percent in 2024, down from a previous projection of 0.3 percent growth. Dragging output down is the industrial sector, which has failed to recover from the shocks of the coronavirus pandemic and Russia’s invasion of Ukraine in 2022.
Germany also appears to have lost some clout in the European Union, which voted on Friday to impose higher tariffs on electric vehicles imported from China, a key trading partner of Germany.
We are having trouble retrieving the article content.
Please enable JavaScript in your browser settings.
Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.
Thank you for your patience while we verify access.
Already a subscriber? Log in.
Want all of The Times? Subscribe.solare