Volkswagen's Labour Showdown: Spiralling Costs and Underused German Factories

Volkswagen is grappling with soaring costs and underutilized German factories, leading to friction with labor leaders. Despite issues like misjudgments on EV investments and management decisions, VW isn't alone; rivals face similar underuse. Lower factory utilization is seen in high-cost countries, while cheaper areas in Eastern Europe fare better.

Volkswagen's conflict with powerful labor leaders over how to address rising costs in underutilized German factories has sparked deep introspection about the root causes of the carmaker's problems.

Complex governance structures, poor management decisions, and Germany's crippling bureaucracy have been blamed. However, data shows that Volkswagen might be better off than some rivals regarding underused plants.

Capacity utilization data across Europe reveals that lower-cost countries have higher factory utilization rates, indicating that the primary issues are in higher-cost home markets. Volkswagen and other major automakers need to rethink strategies to tackle these challenges.

(With inputs from agencies.)