Volkswagen in deep crisis – what does it mean for the future of the European car giant?

Volkswagen, the European car giant, is in a deep crisis that has far-reaching effects on its financial stability, employees and investment plans. This manufacturing colossus is facing unprecedented problems that are forcing the company's management to take drastic cost-saving measures and cut back on key projects. A combination of stagnant demand, especially for electric cars, and relentless pressure to restructure to stay competitive is to blame.

Substantial release and termination of protective contract

One of the most significant signs of the crisis is Volkswagen's decision to formally end a job protection agreement in Germany that has protected workers from massive layoffs since 1994. The move, which was originally supposed to last until 2029, now opens the door to widespread layoffs. Within a few years, up to 30,000 employees could lose their jobs, i.e. approximately 23% of the company's German workforce.

The situation thus casts a shadow over the future of thousands of workers whose employment was considered stable until now. The drastic reduction of employee positions not only underlines the seriousness of the crisis, but also points to the need to adapt the company's structure to the current market conditions, which have changed dramatically.

Declining demand for electric cars

Volkswagen, which has bet on massive investments in electromobility, has been caught off guard by a significant slowdown in demand for electric cars in Europe. Instead of the sales growth the automaker was counting on, thousands of cars remained unsold, straining the company's logistics and finances. A recent speech by CFO Arno Antlitz suggests that lack of sales is the key issue that has led to this crisis. According to him, approximately 500,000 cars were not sold, which corresponds to the production of two production plants. This situation not only caused production disruptions, but also showed the limits of the rapid electrification strategy at a time when consumers remain restrained.

Drastic cuts in investment and research

In addition, Volkswagen announced a plan to reduce its investments by around 20 billion euros, a move that will affect many of its key projects. The crisis will also affect research and development - an area in which the concern has long tried to maintain its technological edge.

The planned reduction of employee positions should affect up to 6,000 workers in research and development, which may slow down innovation and the development of new models. The move suggests the crisis goes deeper than just a temporary slump in sales; it touches on the very foundations of business strategy and innovation, which until now have been seen as necessary for survival in the future market.

As the crisis deepens

Volkswagen's crisis has complex roots. In addition to economic pressure and lower demand for green vehicles, the automaker is facing fierce competition and the need to reduce emissions, which is putting unbearable pressure on costs and production. In addition, growing economic uncertainty in Europe is forcing consumers to postpone purchases and focus on savings, which affects the entire automotive market.

Volkswagen thus faces the fundamental question of whether it can overcome the crisis without losing its leading position. Drastic cost-saving measures are seen as necessary, but they bring the risk that the company will fall short of its ambitions in the field of electromobility and sustainability. The result can be not only a loss of technological advantage, but also a weakening of the company's position on the global market.

Future challenges

The crisis shows how quickly conditions can change in the automotive industry, which is undergoing a transition to electric drive. Volkswagen is forced to rethink its strategic plans, but the question remains whether the company will be able to find a way out that will allow it to stabilize without permanently weakening its competitiveness.

Volkswagen is now at a crossroads where every decision will have long-term consequences. This is a crisis that will require not only fundamental restructuring, but also a new strategy for restoring the trust of employees, the market and consumers.