VW crisis in Saxony: 35,000 jobs in danger-what does that mean for Zwickau?

VW crisis in Saxony: 35,000 jobs in danger-what does that mean for Zwickau?

Zwickau, Deutschland - Volkswagen is faced with a serious crisis and plans to reduce a massive degradation of a total of 35,000 jobs nationwide in order to react to sales problems. This decision also affects the Saxon locations, in particular the E-Auto plant in Zwickau, where production is reduced to two Audi models. In the future, Zwickau will also be redesigned as a location for the recycling of vehicles. This represents a setback for the Saxon economy, since the automotive industry generates over a quarter of industrial sales.

Minister of Economics Dirk Panter (SPD) was concerned about the situation and emphasized the close link between the supplier companies with the production in Zwickau. He calls for individual solutions and support measures to cushion the effects of this drastic decision. The employment figures in the automotive industry are also alarming: In 2023, 95,000 people in Saxony were employed in this sector, with over 800 suppliers who also support BMW, Mercedes-Benz and Porsche in addition to the Volkswagen works.

sales and employment at a glance

The sales of the German automotive industry fell by 5 % to 536 billion euros in 2024. The suppliers, the sales of which were 8 %, were particularly affected - twice as strong as the manufacturers. This development is also reflected in the number of employment: on average, the number of employees in the auto industry dropped by 0.9 %, which corresponds to a loss of almost 19,000 jobs. For suppliers, the decline in 2.4 % was even more serious, the number of employees has been at the lowest level in at least 18 years.

The export numbers are also worrying. Exports to China fell by 17 % in 2024, which follows earlier declines of 18 % in the previous year. In contrast, the USA remains the most important export market for the German auto industry, with an export volume of 34.7 billion euros, which recorded an increase of almost 2 %. Currently, almost 49 % of the total sales of the industry of customers outside the euro zone.

future prospects and challenges

Analysts warn of the possible consequences of these developments. Constantin M. Gall, partner at EY, predicts a continuing job cuts and cost reduction measures in the industry, paired with the need to concentrate on core competencies and to produce more efficiently. High investments in electromobility are under pressure without the corresponding market success, while geopolitical uncertainties and possible trade wars could put additional pressure on industry. Gall also warns of impending relocations to the USA or China.

The future of the automotive industry in Germany remains uncertain in view of these challenges. The next steps of Volkswagen and the suppliers are crucial to secure economic stability in Saxony and beyond. Time is urgent, and solutions urgently need to be found to avert the consequences for the employees and the entire industry.