N. Peter Kramer’s Weekly Column
Profit warnings and additional cost-cutting measures, things were going already from bad to worse for EU carmakers. Now, the CEO of the biggest of them, Volkswagen’s CEO Blume, stated that producing cars here and then exporting them to the rest of the world is no longer viable. Sales for brands in China are declining rapidly, and in the EU, carmakers are facing increasing competition from Chinese brands. A cheap Skoda is no longer sold in China, whereas not so long ago one in three Porsches was sold in China. Also plays an important role that, at the same time, it is not going well for EU carmakers in the important US market, due to Trump’s import tariffs.
As the largest industrial employer in the EU and Germany, Volkswagen always found a willing ear among policymakers. But just as the elected and un-elected EU leaders, the entire automotive sector itself did not seem to know quite what was best for it: crack down hard on China (France) or not (Germany)? Embrace electrification or let policy slow it down? At Volkswagen Wolfsburg, Europe’s largest factory, not a single electric car has rolled off the assembly line yet.
Volkswagen is going to lay off 100.000 employees and close four German factories. It is unprecedented that a company that prided itself on good employee and trade union relations has to resort to one of the heaviest rounds of layoffs ever. EU’s automotive industry is in serious trouble. And by extension the EU industry.
