Germany’s auto crisis deepens as VW plans factory closures

Germany’s car industry is sputtering. Volkswagen plans to shut at least three factories in Germany and cut pay by 10 per cent, according to its employee council. Mercedes-Benz’s net profits have halved from a year ago. Porsche is reviewing its model lineup to cut costs. Weak demand from China is the chief culprit, but high energy costs, critical mineral bottlenecks, stiff Asian competition and a slower-than-expected transition to EVs in Europe have tipped Germany’s emblematic auto sector into crisis. Thomas Schäfer, CEO of VW, defended the company’s plans by arguing that German factories were costing 25 to 50 per cent above target, meaning some sites were twice as expensive to run than competitors’. Strikes are now likely, as is government intervention. VW is a proxy for the German economy and employs 300,000 workers, many in areas where centrists fear electoral insurgency by the far-right AfD.