{"id":426687,"date":"2024-12-03T06:35:46","date_gmt":"2024-12-03T06:35:46","guid":{"rendered":"https:\/\/www.saipantribune.com\/?p=426687"},"modified":"-0001-11-30T00:00:00","modified_gmt":"-0001-11-29T14:00:00","slug":"From-China-woes-to-EV-troubles-VW-faces-rocky-road","status":"publish","type":"post","link":"https:\/\/www.saipantribune.com\/index.php\/From-China-woes-to-EV-troubles-VW-faces-rocky-road\/","title":{"rendered":"From China woes to EV troubles, VW faces rocky road"},"content":{"rendered":"

As Volkswagen seeks to push through a drastic restructuring with billions of euros in cuts, workers nationwide on Monday kicked off what could be a long wave of industrial action.\u00a0<\/p>\n

From high costs to management missteps and slowdowns in key markets, here are some of the key challenges facing the German car giant:\u00a0<\/p>\n

– High costs –<\/h2>\n<\/p>\n

Europe’s biggest carmaker has repeatedly stressed that its costs are excessive and profit margins too low, particularly at its core VW brand.\u00a0<\/p>\n

Production costs in Germany are “clearly too high”, said a leaflet from VW’s management distributed to the workforce ahead of the first round of talks between executives and unions in September.<\/p>\n

All areas would be examined — from development, to manufacturing and distribution — when it comes to cost-cutting, VW group CEO Oliver Blume told public broadcaster ZDF in an interview.\u00a0\u00a0<\/p>\n

High electricity prices, which have risen since the energy crisis triggered by the Ukraine war, as well as elevated labour costs are a significant challenge for the 10-brand group in its home market.<\/p>\n

Worker representatives say VW’s management now want to shutter at least three plants in Germany and cut tens of thousands of jobs.\u00a0<\/p>\n

Unions are fiercely resisting the plans. They began their industrial action Monday with so-called “warning strikes” — short walkouts typically used during ongoing negotiations.\u00a0<\/p>\n

But the powerful IG Metall Union has threatened strikes on a scale not seen in Germany for decades unless management dumps its most drastic plans.\u00a0<\/p>\n

They put forward their own proposals last month to make savings without the need for factory closures but the carmaker’s management rejected them.\u00a0<\/p>\n

Talks continue, with the next round due on December 9.<\/p>\n

Stefan Bratzel, a German automotive expert, told AFP that VW needs to become “much leaner”, as the company has “too many employees who don’t work hard enough and too many committees”.\u00a0<\/p>\n

– China challenge –<\/h2>\n<\/p>\n

Volkswagen — whose brands range from Skoda and Seat to Porsche and Audi — makes around a third of its sales in China, the world’s biggest auto market, but has been losing ground in recent times.<\/p>\n

It has three joint ventures in the world’s second biggest economy, about 90,000 employees and more than 30 plants manufacturing vehicles and components.<\/p>\n

But it has been hit hard by China’s economic slowdown coupled with fierce competition from local rivals, particularly when it comes to electric vehicles.\u00a0<\/p>\n

Chinese EV manufacturers, such as BYD, have captured market share with top-selling models packed with technology that appeal to local customers while VW has struggled with a troubled transition to electric cars.\u00a0<\/p>\n

– Strong links to the state –<\/h2>\n<\/p>\n

Politics have played a key role at Volkswagen for decades. The state of Lower Saxony — home to VW’s historic Wolfsburg headquarters and several factories — holds 20 percent of the group’s voting shares.\u00a0<\/p>\n

This means it has a blocking minority, allowing it to stop key decisions.\u00a0<\/p>\n

This “hampers the company’s ability to adapt” and means it functions as “a state-owned company”, said automotive expert Ferdinand Dudenhoeffer.<\/p>\n

In addition employee representatives sit on the supervisory board, and wield a veto over the creation and relocation of production sites.<\/p>\n

It is also almost impossible to close plants against their will.<\/p>\n

– Troubled electric transition –<\/h2>\n<\/p>\n

VW has poured huge sums into its EV shift but the transition has been troubled.<\/p>\n

It has launched the ID range of cars, such as the ID.3, but the vehicles have experienced problems with their software.<\/p>\n

Former VW CEO Herbert Diess has been criticised for the development of software in-house via subsidiary Cariad, with observers saying the project was costly and botched, and has left the German group lagging behind.\u00a0<\/p>\n

It is hoping to turn around its fortunes with a $5.8-billion investment in US electric vehicle maker Rivian to create a joint venture, a deal that was announced in June.<\/p>\n

jpl-sr\/sea\/lth<\/p>\n

<\/p>\n

Volkswagen is seeking to make major cost cuts as it faces myriad headwinds<\/p>\n

-Ronny HARTMANN
<\/figcaption><\/figure>

<\/p>\n

VW CEO Oliver Blume says all areas are being examined for potential cost savings<\/p>\n

-Tobias SCHWARZ
<\/figcaption><\/figure><\/p>\n","protected":false},"excerpt":{"rendered":"

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