With Volkswagen considering historic layoffs and corporate restructuring, it has become clear that Europe’s automotive industry is imploding — and it only has itself to blame.
Last week, VW CEO Oliver Blume announced a plan to cut approximately 100,000 jobs worldwide and close four factories in Germany. The plan would also cut investment by 15 percent over the next five years.
For VW and its subsidiaries — Porsche, Audi, Lamborghini, Bentley, Ducati, and more — this is a long time coming as European Union policy has made it increasingly difficult to do business. Labor costs are high, energy is overwhelmingly expensive, and the push towards electric vehicles (EVs) created a bubble that is only sustainable by the government.
Then along comes China, with companies like BYD, making EVs quicker and cheaper, destroying the large market share VW had in the country. With these profits gone, doing business, especially in Germany where labor unions have immense power, is no longer sustainable.
Europe needs to face facts and realize that China’s growth in the global marketplace is forcing a rethink of business models. It can no longer sustain high labor and production costs, sink billions of dollars for EVs nobody wants or can afford, or be gigantic conglomerations with slow production and innovation.
If the EU doesn’t make changes, then other countries (such as the United States) will continue to benefit from exported manufacturing jobs. In fact, Audi is considering some U.S.-based manufacturing after closing down several German plants.
This, and VW’s downsizing plan, are not official but the point remains: EU carmakers can either change or go out of business, causing the economy, and people, to suffer.