Audi plant in Brussels threatened with closure - VW cuts forecast
Audi, a subsidiary of Volkswagen, is putting its commitment in Brussels to the test. A solution for the plant with around 3000 employees is to be found in conjunction with the unions, it was stated. Specifically, the goal is to prevent the final closure. Volkswagen's parent company has already adjusted its annual targets.
Audi may prematurely stop production of its luxury electric model Q8 e-tron due to weak demand and is putting the Brussels plant under review. The Volkswagen Group announced that the Supervisory Board had decided on an "information and consultation process" at the Brussels site. Now, solutions for the site will be worked out in conjunction with social partners. "At the end of this process, the plant's closure could be an outcome." Audi has been producing in Brussels since 2007. At the end of the previous year, there were slightly more than 3000 employees there. They produced over 53,500 purely electric cars in 2023.
This step, along with other unexpected expenses, has significant implications for the entire corporation's business, it was further stated. This includes, for example, the denial by the German government of the sale of the MAN Energy Solutions gas turbine business to a Chinese interested party. The division is now being wound down in parts.
Already in April, the DAX company had announced that it would take on 900 million euros for personnel reductions in the administrative sector. The company now estimates additional costs of 1.7 billion euros, which cannot be offset in the current year. With these additional burdens, the total costs amount to up to 2.6 billion euros.
Volkswagen lowered its forecast for the current business year and now expects an operational return on sales of 6.5 to 7 percent (previously: 7 to 7.5 percent). The forecast for the other key performance indicators remains unchanged.
Sales of electric cars have been sluggish for months. In Germany alone, 16.4 percent fewer new registrations of plug-in vehicles were reported in the first half of the year compared to the previous year, as the Federal Motor Transport Authority recently reported. In June, 43,412 electric cars were registered in Germany - 18.1 percent fewer than in the previous month. For Europe, the European automobile manufacturers' association ACEA reported in May a decline in new registrations of electric cars by 12 percent to 114,308.
"The demand remains weak, there are no signs of a fundamental improvement in the situation," Constantin Gall of the consulting firm EY described the situation on the European new car market. Reasons include the faltering economy, geopolitical tensions, and the loss of purchasing power due to inflation. In addition, there is now "uncertainty about the ramp-up of electromobility." In Eastern EU countries, electric cars still play no role - and it does not look as if this will change soon.
- Due to the challenging conditions in the car industry, German carmakers like Audi and Volkswagen are implementing cost-saving measures, which include job cuts at some of their plants.
- The Volkswagen Group, which includes Audi as a subsidiary, is currently reviewing the production of the Audi Q8 e-tron in Brussels due to weak demand, which could lead to potential job losses.
- In an effort to reduce expenses, Audi, as well as other German car manufacturers, are implementing savings programs, which include cuts in the administrative sector and adjustments to annual targets.
- The sluggish sales of electric cars in Europe, coupled with economic uncertainty and geopolitical tensions, are causing challenges for both Audi and Volkswagen, leading to the need for strategic reevaluations in the car industry.
