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volkswagen of germany is considering closing factories. the reason is that it is operating in difficulty and it is a way to reduce costs. but this is the first time since the company was founded in 1937 that volkswagen has "closed" a factory instead of redeploying or moving it.

according to major foreign media such as cnbc and reuters, oliver ramé, ceo of volkswagen group (c1eo), issued a statement saying, “the european automotive industry is in a very difficult and serious situation. the economic environment has become more difficult and new competitors are entering the european market.” he also emphasized, “germany in particular is falling further and further behind in competitiveness as a manufacturing base. decisive measures should be taken now.”

volkswagen said: "the company's brands will undergo comprehensive structural adjustments." he said that he could not rule out closing german factories that produce vehicles and parts. he also said: "in order to strengthen short-term competitiveness, structural adjustments are urgently needed." the employment stability agreement that guarantees the employment status of all workers will end by 2029. this is an agreement that volkswagen has maintained since 1994.

at least one of the six plants currently operated by volkswagen in germany will be selected for closure, most likely one of the plants in osnabrück, lower saxony, and dresden, saxony. among them, the plant in lower saxony is more likely to be liquidated because the second largest shareholder recently designated it.

volkswagen is making structural adjustments precisely because of the conversion to electric vehicles. the company needs to save about 10 billion euros by 2026, but this is for existing factories. the problem is that volkswagen's sales in the chinese market were unexpected, and it finally chose to restructure. another problem is that volkswagen has as many as 295,000 employees in germany, which cannot withstand the resistance of the union. unlike in china, the volkswagen union has a majority of seats on the supervisory committee with the authority to appoint management.

in a recent interview, volkswagen ceo thomas schaefer expressed a sense of urgency, saying: "simply reducing costs will not solve the problem. brands must be restructured and look for possibilities." his remarks represent the current situation among volkswagen's european automakers. it also reveals that there is actually no good way to deal with the offensive of chinese electric car manufacturers such as byd. in fact, this year, volkswagen group's operating profit margin fell by 11.4% year-on-year.

entering 2024, volkswagen faces huge challenges in the chinese market. in the first half of the year, volkswagen sold only 1.2666 million vehicles, and its market share fell to 12%, while byd topped the list for the first time with 1.6071 million vehicles, becoming the domestic sales champion. this change marks the end of an era, and volkswagen has to give up its long-held dominant position.

this result is not only a reflection of byd's own strength, but also an important symbol of the rise of china's own brands. domestic cars are no longer just a synonym for low-end products, they are winning the favor of consumers with higher cost performance and technical content.

for volkswagen, how to deal with this unprecedented challenge will be the key to its future development. with the continuous growth of the new energy vehicle market and the growing demand of consumers for new technologies, volkswagen needs to re-examine its strategic positioning in the chinese market.