German Media: Volkswagen in Deep Crisis — Can "Chinese Models" Be the Savior?

Volkswagen may cut tens of thousands of jobs globally. Faced with increasingly fierce competition from China, how will this automotive giant respond? Olaf Lies, the governor of Lower Saxony in northern Germany — where Volkswagen’s headquarters is located — advocates a different approach.

Olaf Lies, governor of Lower Saxony and a member of Germany’s Social Democratic Party (SPD) as well as Volkswagen’s supervisory board, believes that Volkswagen Group, despite its current crisis, could also produce vehicles developed in China at its factories within Germany. Speaking to Deutsche Presse-Agentur (dpa), he stated that doing so would boost factory capacity utilization and safeguard jobs.

"If we bring here the models currently manufactured in China, we can stabilize our factory capacity utilization," Lies continued. "This way, we can also bring back opportunities for new development and innovation to our domestic base. What matters to me is securing employment and capacity in our factories—not watching passively while others build new plants outside Germany."

Objective: Bringing More Capacity Back to Europe

Currently, the number of vehicles Volkswagen puts on the market is insufficient to achieve optimal capacity utilization across all its factories. At the same time, the Volkswagen Group is jointly developing and producing certain models with Chinese partners. Lies explained: "That means we are bringing our own models back to our factories here through cooperation with partners. We’re not talking about relocating production out of Germany, but rather bringing additional products and capacity back to our European production bases."

This idea emerged amid the current difficult situation in the automotive industry. Lies pointed out that while the market size is shrinking, competitive pressure is rising, and Chinese cars are entering European markets in growing numbers. Yet he emphasized: "I refuse to accept the logic that because Chinese manufacturers enter our European market and capture our share, we must continue cutting jobs or closing factories." He added that the real question is whether people want to be passive observers or actively shape the course of events.

Media: Volkswagen Plans Global Job Cuts Up to 100,000

According to sources cited by German business magazine Manager Magazin on Friday, June 26, Volkswagen’s cost-cutting plans have been escalated, with projections indicating up to 100,000 job cuts over the coming years—double the original estimate. Meanwhile, four factories in Germany face potential closure.

Volkswagen AG confirmed an upcoming "deep transformation," though it did not verify the specific figures or the locations of planned closures. A company spokesperson stated: "Over recent months, the board has actively developed future plans for restructuring the company." The goal is to "enhance operational efficiency, streamline organizational structures, and systematically unlock technological synergies." However, the spokesperson declined to disclose further details.

Lower Saxony holds 20% of voting rights in Volkswagen Group. Both Lies and his deputy, Julia Willie Hamburg (Green Party), serve on the supervisory board. Alongside employee representatives, they hold a majority there. Moreover, the state possesses a veto power in major decisions.

Following reports of the intensified cost-cutting plan, Lies clearly stated on Friday that Lower Saxony would never approve any measures that treat plant closures as a simple solution or challenge the established co-determination system. He further stressed: "If we keep focusing solely on shutting factories and expanding layoffs, Volkswagen will have no future."

"The Harsh Reality of Structural Change"

Economists view this job-cutting crisis as a reflection of declining industrial competitiveness in Germany and mounting pressure from China. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank (HCOB), said: "This is the harsh reality of structural change. Chinese industry is surging into our core sectors—automotive, mechanical engineering, and chemicals—with tsunami-like force."

The German federal government spokesperson noted that while the government is doing everything possible to prevent the closure of any German production sites, such decisions ultimately remain corporate ones. Chancellor Merz has repeatedly emphasized that the government is committed to enhancing the price competitiveness of German companies.

In response, Lies calls for dialogue at the European level. He pointed out that all manufacturers are under pressure, making it essential to develop a shared strategy for Europe’s automotive industry. "Facing particularly intense pricing pressure from China, we need solutions to protect European production capacity, supply chains, and jobs."

Could China Be Part of the Solution?

Volkswagen has had decades-long cooperation with Chinese partners. Lies stated that through collaborations with companies like XPeng and SAIC, the Volkswagen Group has rapidly closed technology gaps and strengthened its competitiveness. Volkswagen has operated in China for 42 years; during prosperous periods, annual production volumes in China reached around 3 million vehicles.

Lies believes rejecting technological advances originating from China would be a mistake. "Our goal must never be mutual isolation in technological development," he emphasized. "Innovation, regardless of its origin, should create jobs and generate new value in our production facilities in Lower Saxony and Germany."

After visiting China in April this year, Lies proposed assessing the feasibility of producing Chinese-made models at Volkswagen’s German factories.

Volkswagen CEO Oliver Blume himself acknowledged that there are smarter solutions than simply closing factories. To improve capacity utilization in European plants, Blume said in May that the company is considering introducing models specifically developed in China to the European market. He noted that Volkswagen will evaluate whether these new models, originally intended for the Chinese market, have sales potential in Europe—but this remains at the review stage, without any concrete agreements yet.

Meanwhile, Volkswagen is seeking new opportunities in the defense sector, particularly for the Osnabrück plant, which faces model phase-outs. Blume confirmed that Volkswagen is engaged in "intensive and constructive" talks with the defense industry.

Source: DW

Original article: toutiao.com/article/1869202521179148/

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