Volkswagen Closures make financial sense to car company, but a political battle looms

When Bernd Pischetsrieder attempted to cut jobs at Volkswagen in the early 2000s, he was forced out.

- Jasper Jolly

When Herbert Diess tried the same, he got the same result, leaving in 2022.

Yet now Volkswagen appears to be deliberately grasping the nettle.

"This time it's different," says Matthias Schmidt, a Berlin-based automotive analyst. The chief executive, Oliver Blume, is "VW through and through", and his actions probably reflect the desires of the controlling Porsche and Piëch dynasties, Schmidt says.

The course is set for a historic clash over the future of Germany's largest carmaker.

The manufacturer's announcement this week that it is considering the closure of two German factories has shocked its workforce, who gave a first taste of the opposition they will mount with protest banners carried into a meeting of thousands of employees with executives on Wednesday.

It comes as Europe's incumbent carmakers find themselves squeezed on all sides. Demand is subdued, EU and UK rules on carbon emissions are tightening, and Chinese competitors are muscling in on their business.

That may be why VW's owners have decided that now is the time to cut factories. Schmidt says the company has long been a "bloated monster" in its home operations.