Volkswagen’s ongoing challenges have apparently reached critical mass with the company confirming that the Volkswagen brand has only a few years remaining to turn things around before it reaches the point of no return. Stunning admission comes as the company continues to navigate its way through challenging times.
VW ID Buzz and Microbus
Volkswagen’s bold gamble into EV vehicles was supposed to bring the company into a newfound era of prosperity after it weathered the storm from the infamous “Dieselgate” scandal which saw the company pay hefty financial penalties for lying about how much emissions its diesel-powered products were producing.
The subsequent collapse of demand for diesel models forced the German car giant to roll the dice on EVs but it appears that all is not going well for the company with Volkswagen confirming that sales for its EV lineup have gone down significantly even as VW Group reported an increase in sales in Europe.
The clock is ticking for Volkswagen
The stunning admission came from Volkswagen’s CFO Dr. Arno Antlitz during a meeting with workers at the company’s headquarters in Wolfsburg on Wednesday. Antlitz revealed that the company has “one, maybe two” years to turn things around for its main car brand Volkswagen. The admission comes on the heels of a prior report that appeared to suggest that Volkswagen could close two plants in Germany which has never happened before in the company’s 87-year history.
The meeting saw 25,000 workers make their way to the company’s headquarters and every single one of them had plenty to say to the company’s top officials when the topic of plant closures came up in the meeting according to a report from Reuters. The talk of plant closures also runs afoul of an agreement that Volkswagen entered into in the 1990s that guaranteed the job security of VW Group employees through 2029. However, alot has changed since that document was signed, and Volkswagen says that it needs to enact massive cost cuts as changing market conditions in Europe force it to alter various aspects of its long-term plans. Antlitz also revealed the brand is experiencing a shortfall of around 500,000 vehicles and this shortfall will most likely cause sales to not fully recover to pre-pandemic levels.
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VW’s Work Council is not happy
Volkswagen’s statement was unsurprisingly, met with harsh blowback from the Volkswagen Works Council who blasted top executives for failing to do their jobs and forcing employees to pay for their mistakes. In a separate report to Euronews, Chairperson Daniela Cavallo pulled no punches in holding the top brass of the company accountable for their actions during the meeting and also used the opportunity to point out how employees will now be forced to bear the brunt of the consequences for the decisions made by top execs.
This reaction also highlights the consequences of what would happen if VW moves forward with its plans to close plants. For example, the closure of the two German plants will result in the loss of jobs with the loss of these workers creating a negative ripple effect through the local economy which will cause businesses that depend on plant workers for their sources of revenue to either cut back on their own staff or be forced to close outright due to decreased profits.
Is there a light at the end of the tunnel for Volkswagen?
Scout Debut Tease
While Volkswagen’s troubles in its home country are certainly raising the alarm of the company as a whole, it all comes at a time when sales in Europe, South America, and the U.S. are increasing. Asia continues to be a weak spot for the company with Volkswagen’s sales in that market sliding by 8.2%. The European market is also where the company is struggling with EV sales, with those figures dipping by 15.2%
With these challenges in place, expect the company to put a bigger spotlight on sales in the U.S. with our market continuing to have a strong appetite for utility vehicles and crossovers. The launch of the Scout brand is still proceeding on track with the pair of EVs that Scout will be offering targeting the pickup and SUV segments which have the potential to help unlock a large stream of profits for the brand and Volkswagen as a whole.
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