For The First Time In 88 Years, Volkswagen Is Closing Its Dresden facility In Germany.

Volkswagen will close a production facility in Germany on Tuesday for the first time in its 88-year history.

The automaker reached an agreement with the works council and unions in 2024 to lay off 35,000 workers and reduce production capacity in Germany in response to competition from Chinese manufacturers, falling demand in the European market, and slower-than-expected adoption of electric vehicles.

As part of that agreement, vehicle production in Dresden, the capital of the eastern German federal state of Saxony, is slated to end by the end of this year.

The company will halt vehicle production at its Dresden facility on Tuesday, marking the first time in 88 years that Volkswagen has closed a production facility in Germany.

The closing of the Dresden plant follows cash flow problems due to weak sales in China, falling demand in Europe, and pressure on sales in the US due to tariffs. In the next five years, the company must finance investments in the amount of around 160 billion euros.

Initially, Volkswagen positioned this plant as an exhibition facility that demonstrates the company’s technological capabilities. It first produced the Phaeton models and later the ID.3, but none of those models brought significant success to the company.

The closure of this factory in Volkswagen is considered a minor but necessary step to survive in the face of fierce competition from China, US tariffs, excessive bureaucracy in Germany, high energy costs, strong labor rights, and complex internal administration.

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