Volkswagen’s Woes Reflect a Stagnant German Economy

No manufacture is much important to nan German system than automobiles. And nary carmaker is much important than Volkswagen.

Now, arsenic nan 87-year-old automaker is floating nan imaginable of occupation cuts and mill closures arsenic it seeks to return to profitability, Volkswagen’s struggles are being reflected successful nan wide troubles facing nan country, which is grappling pinch a shrinking business assemblage and an system that is forecast to statement for a 2nd consecutive year.

“The truth that Volkswagen, Germany’s largest car manufacturer, largest business employer and nan world’s No. 2 down Japanese carmaker Toyota, is nary longer ruling retired works closures and compulsory redundancies shows really heavy nan German manufacture is now successful crisis,” said Carsten Brzeski, main economist astatine ING Germany.

The issues dragging connected profitability astatine Volkswagen’s halfway marque — high-priced labor, cumbersome organizational structures and an inability to support up pinch advances by Chinese automakers — reflector those facing Germany’s wide economy.

On Monday, nan German authorities said nan system would statement 0.2 percent successful 2024, down from a erstwhile projection of 0.3 percent growth. Dragging output down is nan business sector, which has grounded to retrieve from nan shocks of nan coronavirus pandemic and Russia’s penetration of Ukraine successful 2022.

Germany besides appears to person mislaid immoderate clout successful nan European Union, which voted connected Friday to enforce higher tariffs connected electric vehicles imported from China, a cardinal trading partner of Germany.