How did Volkswagen get there?

We thought Volkswagen's darkest years were over. But if Dieselgate is well behind it, it is a new, very complicated period into which the German car manufacturer has just entered. A real period of crisis. A historic social plan even led by several factory closures – we already know that this will be the case for Audi in Brussels. By tens of thousands of jobs lost. By reductions and salary freezes. If all the contours of these measures have yet to be clarified, the brand's general director spoke during this first weekend of November. So how did we get to this point?

“Our costs must drop massively”

All the explanations from Oliver Blume, chairman of the board of directors of Volkswagen AG since 2022, and therefore of the 13 brands related to it, are contained in one sentence, delivered to the German newspaper Bild am Sonntag: “Weak market demand in Europe and significant drop in profits in China reveal decades of structural problems at VW”. The big boss is referring in particular here to the fact that production costs in Germany are very high, sometimes twice as much as on other European sites. Compared to the ten German factories and some 120,000 people who work there, VW has lost competitiveness. “Our costs in Germany must fall massively.”

900 million euros aside

However, Volkswagen's current figures don't seem that bad in 2024: “The group's sales are currently slightly higher than the previous year. Our new products are well receivedas evidenced by the increase in orders in the third quarter”. But it's too late, the damage is already done. And besides, Volkswagen had planned this period of closures and layoffs for a long time since according to the German newspaper, the group set aside no less than 900 million euros to finance the restructuring. A large part of which will be paid in severance pay to employees forced to leave.