Thursday, October 28, 2021
Cars from China for Europe?
Insider: VW top prepares a turning point
By Diana Dittmer
In the coming years, Volkswagen supposedly wants to import tens of thousands of ID.6s produced in the Far East to Europe in order to save costs. Group boss Diess announces “some downsizing” at the same time. There are increasing signs that things are not looking good for the German location.
The alarm bells of the powerful works council in Wolfsburg are likely to ring: Allegedly, Volkswagen plans to produce around 15,000 ID.6 vehicles in the Far East each in the coming years and then import them to Europe. This is reported by the business portal Business Insider, citing internal circles. The reason given is the low production and personnel costs in China, which production in Germany cannot keep up with. The margins would be more generous in China. According to the report, a total of around 80,000 electric SUVs built there are to be sold in Europe. It is said that a decision should be made in just a few weeks.
The question that arises is whether and how much production will be relocated to China and jobs in Germany will be eliminated. The group did not want to comment on the plans, but a spokesman admitted that an import from China is not unlikely: “If models are successful in one market, it is only natural that the market opportunities in other regions are analyzed. That applies Of course, also for the seven-seater ID.6 SUV. Volkswagen could also open up a new market segment in Europe with it. “
The next conflict between corporate management and employee representatives is likely to be programmed. The mood in Wolfsburg is tense, the works council and management around Diess have been on a confrontational course for weeks. The fact is: the main VW plant in Wolfsburg is underutilized. In 2021 there could be as little production here as it was last at the end of the 1950s, it was said recently. There are no known plans to strengthen the main plant in the short term. Another electric model for Wolfsburg is not planned until 2026.
Volkswagen is grappling with the complex transformation from combustion to e-mobility. Catching up on the electric car pioneer Tesla costs time, money and nerves. CEO Herbert Diess had only recently caused uncertainty by saying that he sees up to 30,000 jobs in Germany at risk if the conversion to a leading electric car manufacturer does not succeed. Elon Musk’s e-car maker not only shows traditional car manufacturers what is possible in terms of e-mobility, but also how savings can be made in the process. Tesla’s Model 3 are already produced in China and exported all over the world from there. This is how Musk keeps production and labor costs down. The US competitor is likely to have been the blueprint for the Wolfsburg plans.
Chip crisis and tough China sales
The German location is not looking good. Even the most recent quarterly figures do not give cause for the all-clear. On the contrary: they further fuel concerns about a shrinking process. Volkswagen has the chip crisis fully under control. The operating profit fell surprisingly significantly in the third quarter. A week ago, works council boss Daniela Cavallo publicly accused the management around Diess of lack of plan. The corporate management seemed overwhelmed by the chip crisis, she wrote in an employee newspaper.
The works council member sees a lot of need for discussion. How bad the mood is in Wolfsburg was also shown on Wednesday when Cavallo increased the pressure on Diess. She accused him of not wanting to cooperate. He would rather go to the US than deal with the employee representatives. Diess had previously canceled an invitation to a works meeting on November 4th because of a trip to the USA. In the evening he announced that he had changed his plans.
That there is a need for discussion was also confirmed during a conference call on the quarterly figures, at which Diess underlined the worries of the workforce: In some areas, the switch to the construction of electric cars would require significantly fewer workers, he told journalists. There will be “some downsizing,” he announced. However, he did not quantify the exact amount of the downsizing.
Shutting down production in Germany and ramping up that in China makes sense not only for cost reasons. Should Diess ship vehicles produced in China to Europe, he would kill two birds with one stone. It was known that things weren’t going smoothly in China. Volkswagen is struggling with sluggish sales of the ID series in what is by far the most important market. Only recently, Diess had counted his China boss because he had not achieved the sales targets for the ID series.
Volkswagen actually wanted to sell 100,000 ID vehicles in the Middle Kingdom this year, but the company now officially only speaks of 80,000. Evil tongues claim that Wollenstein is sitting on the ejection seat. Diess’ rebuilding plans are taking shape. What is certain is that they contain a lot of explosive material. On the occasion of the speculations in China, however, the works council once made it clear: Without the approval of the influential employee representatives in the group, Diess will have a difficult time with his plans.