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why is volkswagen group (hereinafter referred to as "vw") considering closing its factories in germany, even at the risk of falling out with unions and state governments?

on the 2nd local time, volkswagen issued a statement saying that the company is considering closing one of its automobile manufacturing plants and a parts factory in germany for the first time, and terminating the employment protection agreement implemented since 1994 to further cut costs.

it is reported that this is the first time in the 87-year history of volkswagen (founded in 1937) that it has considered closing its domestic factory. the last time volkswagen closed a factory was more than 30 years ago: in 1988, the group closed its factory in westmoreland, pennsylvania, usa.

with car sales in europe still nearly a fifth lower than before the outbreak, manufacturers including volkswagen, stellantis and renault are operating more than 30 plants at levels that analysts consider unprofitable, according to just auto, an auto industry consultancy. among them is volkswagen group's largest plant in europe, in wolfsburg, germany.

zheng chunrong, director of the german research center at tongji university, told the first financial reporter that the german economy is indeed facing some difficulties that affect its global competitiveness. these problems include backward infrastructure in some german states, insufficient funds for investment in new technologies, and complicated bureaucratic procedures. in addition, german companies have high labor costs in their country and market opportunities are not necessarily good, so german companies are likely to transfer their investments.

he explained to reporters that on the one hand, there are subsidies in the united states, so german companies may move to the united states, and some german companies may move to china. "at present, german companies have made a lot of investments in china. german companies want to concentrate the supply chain from beginning to end in one place to reduce their costs and ensure stability."