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in the long history of the volkswagen group, 2024 is destined to be an extraordinary year.

this german automobile manufacturing giant has madea decision that may go down in history: closing its factory in germany.

recently, the financial times of the united kingdom disclosed a piece of news that shocked the automotive industry:volkswagen is considering closing its factories in germany and trying to end its job protection agreement with unions to cut costs.

this is the first time such a decision has been made in volkswagen's 87-year history.

volkswagen has around 650,000 employees worldwide, nearly 300,000 of whom are in germany.

long-term low profit margins and rising cost pressures,this forced volkswagen to choose the direct and painful way out of the crisis: closing factories.

it is understood that in order to meet these challenges, volkswagen hasfor layoffs and other unplannedexpenditurea budget of 2.6 billion euros (about 2.8 billion u.s. dollars) has been set aside.

once this measure is implemented,this will mean the loss of thousands of jobs.it dealt a heavy blow to the german working class and also touched the economic nerves of the entire country.

as competition in the global automotive industry becomes increasingly fierce, volkswagen's decision will undoubtedly become an important node in the history of the german automotive industry.

01

should we take drastic measures or drink poison to quench thirst?

volkswagen has always played a vital role in the glorious history of the german automobile industry.

however, with the shrinking global automobile market, especially inthe decline of the traditional fuel vehicle market has seriously affected volkswagen's revenue.

at the same time, the companythe transformation to electric vehicles has required huge investments, but the returns have not met expectations。in the volkswagen group's financial statements,the continued slump in profit margins and the continuous rise in costsit forms a sharp contrast.

in 2023, data released by the company showed that despite global sales reaching a staggering 230 billion euros, net profit fell by nearly 15% year-on-year to only 15.4 billion euros.

this trend has not been effectively curbed in 2024.in the first half of the year's financial report, the year-on-year decline in net profit further widened.

faced with the weight of financial pressure, volkswagen group's decision-makers stood at a crossroads.

last year, volkswagen announced an ambitious"cost reduction and cost saving" plan.the goal is tocost savings of €10 billion by 2026，and expectsthe return on sales increased to 6.5%, but the reality was far more severe than expected.

specifically, volkswagen's sales costs in core markets continue to rise.

in europe, the newenvironmental regulations and higher technical standards have increased the production cost of each vehicle by an average of about 1,000 euros。

in the north american market, consumers' increasing preference for suvs and trucks has forced volkswagen to increase its investment in these segments, further pushing up costs.

at the same time,the instability of the global supply chain,in particular, the shortage of semiconductors has seriously affected volkswagen's production plans, increasingadditional cost burden.

in the field of research and development, volkswagen has to invest huge amounts of money in order to maintain its technological leadership and market competitiveness.

in 2023, the company's r&d expenditure will account for6.3% of sales, reaching a record 14 billion euros.this number is expected to increase further in 2024 to support the development of electric vehicles and autonomous driving technologies.

these investments are unlikely to generate direct economic benefits in the short term, but will instead increase the company's financial pressure.

in addition, volkswagen also faces huge financial challenges in its transition to the electric vehicle market.

although the company has launched several electric models, such asID.3and id.4, but market acceptance and sales performance did not meet expectations.

in the first half of 2024, volkswagen's electric vehiclesglobal sales were only 200,000 units, far below the company's target of 400,000 units.this not only affects the company's revenue growth, but also makes it difficult for the huge investment in electric vehicles to pay off in the short term.

against this backdrop, closing factories has become an option that volkswagen group has to consider.

by reducing production facilities, companies can reduce depreciation and maintenance costs of fixed assets while reducing personnel expenses, thereby improving their financial situation.

closing the plant, while a painful option, may be the best decision for the company under the current circumstances.by closing the plant, volkswagen can immediately reduce some of its fixed costs.gain valuable breathing space for the company.

volkswagen’s predicament is not just a corporate crisis, but also the collapse of germany’s automotive dream.

02

game between unions and management

closing factories is undoubtedly an extreme measure.

it is for volkswagenthis offers the potential to significantly reduce operating costs in the short term.

for a company that has long been struggling with low profit margins,this immediate effect seems to be a life-saving straw.

but this short-term financial relief comes at an extremely high cost.not only does it affect workers’ livelihoods, it can also cause long-term damage to a company’s brand image.

closing factories means that a large number of employees will lose their jobs, which is undoubtedly a heavy blow to a country like germany that is highly dependent on manufacturing.

in germany, a country with a manufacturing-based economy, unemployment could spread quickly throughout the community, causing a ripple effect on the regional economy. workers’ quality of life would also be severely affected, and the impact could spread further to their families and communities.

also,large-scale layoffs may also arouse widespread public dissatisfaction.damages the brand image that volkswagen has carefully built over the years.

as an enterprise with a profound historical heritage, every decision made by volkswagen is closely watched by the public.once management is labeled as callous, the brand reputation built up over the years can collapse overnight.

in this silent war,the employment security agreement signed in 1994 has become the focus of bargaining between the two sides.

management hopesby terminating this agreement, we can further reduce labor costs and achieve financial self-rescue.however, this proposal wasthe union strongly opposed it and vowed to defend the rights of employees.

this conflictit's not just about money, it's also about faith and the future。it is full of uncertainty whether the union can defend the rights of employees in this battle or will be forced to compromise.

if the unions can successfully defend the rights of employees, it will be a positive response to the decisions of volkswagen management.strong constraints。

if the union eventuallyif employees are forced to compromise, their interests may be harmed and the company's labor-management relations may become strained.

more importantly,if the two sides cannot reach an agreement, the ultimate victims will be those innocent workers whose fate will depend on the outcome of the game between the two sides.

is volkswagen ready for what could be a protracted struggle? has management considered all the possible consequences, including employee dissatisfaction, public criticism and damage to the brand image?

the decision to close the factory was a helpless move by volkswagen under financial pressure.but the long-term impact of this decision remains to be seen.

volkswagen needs to balance short-term financial interests with long-term brand reputation and find a sustainable development path that can ensure the company's financial health while safeguarding employee rights and social responsibility.

03

dusk made in germany

volkswagen's closure of its german factories is just a microcosm of the decline of germany's manufacturing industry.

this decision is undoubtedly a loud slap in the face of the german automotive industry.

the german automobile industry was once the pride of germany.benz、bmwbrands such as and volkswagen enjoy a high reputation all over the world, representing the exquisite craftsmanship and reliable quality of german industry.

the industryit was once an important pillar of the german economy, creating a large number of jobs and bringing huge wealth.but today, german manufacturing is facing a series of challenges.

high labor costs, outdated factory equipment and a rigid and inflexible union system, all of which put volkswagen at a disadvantage in terms of cost control.it is difficult to compete with competitors in emerging markets.

volkswagen's decision to close its german factories was made in this context.it's not just about cutting costs, but also about investing resources into the electric vehicle sector.

in contrast to its contraction in its home country of germany, volkswagen has been making frequent moves in the chinese market.

in 2023, volkswagen groupit established its largest r&d center outside its headquarters in germany in hefei.

then, in april 2024, volkswagen group (china) announced its investment2.5 billion euros, used forexpanding hefei production and innovation center，strengthen local r&d andacceleration andxpeng motorscooperateproduction of smart electric vehicles.

all this shows that volkswagen is actively developing its presence in the global market, especially the chinese market.

china is the world's largest automobile market and the world's largest electric vehicle market.a complete automotive industry chain, including parts suppliers, battery manufacturers, charging facilities, etc.all of these have provided volkswagen with agood foundation。

of course, volkswagen's investment in china also faces fierce competition.byd、nio, xiaopeng and other local brandsrapidly rising in the field of electric vehicles,this creates competitive pressure on volkswagen.

volkswagenincreased investment in china，not only forseize market share，in order to achievelocalization strategy to achieve overtaking in the field of electric vehicles.

in the process of global layout, volkswagen needs to balance the interests of different markets, especially in the highly competitive and rapidly changing chinese market.whether volkswagen can achieve overtaking by increasing investment will be the key to its future strategy.

is this choice of the public a brave attempt to save itself or a short-sighted view of the future? time will tell.but there is no doubt that it will be a key turning point in the history of the german automotive industry.

this not only affects the rise and fall of a company, but is also a microcosm of the entire automotive industry's transformation period.