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Redundancies Announced In The German Automotive Industry
The German automotive industry is cutting costs. Volkswagen recently launched a program for ten billion euros less spending, which also means layoffs. Auto parts suppliers also feel the decline because there are not enough buyers.
How do I understand the announcement by the heads of Volkswagen about the focus on major cost cuts? “In principle, it is about reducing the high costs that arise from underutilization of production capacities in factories. They are eliminating shifts in factories that produce only electric models, such as the Zvikau factory. And they need money to invest in the coming years, when sales will not only increase, but a more demanding period follows, especially for the Volkswagen brand.
ZF announced the termination of 14,000 jobs, not only in Germany but also in other countries. “It is also clear that the competition is increasing, that new suppliers are entering the game, such as Nvidia, which produces chips, and that Chinese suppliers are taking a piece of the cake from former business partners,” explained expert Stefan Bratzel.
When asked if German brands can still put pressure on their suppliers and cut costs, Bratzel replied:
“Manufacturers have to be careful not to cross the line because they need strong suppliers. Of course, they have to be affordable and competitive. Some are focused on keeping their suppliers alive in the long term, which is the right way.”
Stefan Bratzel sees big challenges for German industry in the next two years. Meanwhile, Chinese electrical brands are climbing steeply, and in the software field, the Japanese have also begun to connect.
