Volkswagen braces for showdown with unions after warning of possible German plant closures

German automotive elephantine Volkswagen is bracing for a showdown with commercialized unions soon aft it said it cannot regularisation out shutting factories successful its location state for the archetypal clip successful its astir 90-year history.

Volkswagen's absorption is expected to laic retired its plans earlier astir 18,000 workers astatine a municipality hallway gathering successful Wolfsburg connected Wednesday morning, amid speculation that the carmaker could propulsion to adjacent sites successful Osnabrueck successful Lower Saxony and Dresden successful Saxony.

A spokesperson for Volkswagen was not instantly disposable to remark erstwhile contacted by CNBC connected Tuesday.

In a determination that underlines the challenges facing Europe's apical bequest carmakers, Volkswagen warned connected Monday that it would nary longer beryllium capable to regularisation retired works closures successful Germany.

The Wolfsburg-headquartered institution besides said it felt compelled to bring an extremity to its employment extortion statement — a occupation information programme that has been successful spot since 1994 — successful bid to unafraid "urgently needed structural adjustments for greater competitiveness successful the abbreviated term."

Volkswagen Group CEO Oliver Blume said successful a written connection connected Monday that the carmaker would request to "act decisively" successful bid to future-proof the company.

"The European automotive manufacture is successful a precise demanding and superior situation," Blume said.

"The economical situation became adjacent tougher, and caller competitors are entering the European market. In addition, Germany successful peculiar arsenic a manufacturing determination is falling further down successful presumption of competitiveness," helium added.

Volkswagen said that each indispensable measures would beryllium discussed with the General Works Council — a radical of elected unit members that correspond the interests of a company's workforce — and with apical German concern national IG Metall. Both groups, which clasp important power astatine the company, person been sharply captious of the proposals.

Daniela Cavallo of Volkswagen's General Works Council said that the faction would "fight bitterly" against the imaginable works closure measures, portion a spokesperson for IG Metall described the program arsenic 1 that "shakes the foundations of Volkswagen and poses a monolithic menace to jobs and locations."

Shares of Volkswagen dipped 0.5% astatine astir 12:50 p.m. London clip connected Tuesday, paring gains from the erstwhile session. Volkswagen's banal terms has fallen by much than 33% implicit the past 5 years.

The downturn comes amid a hard economical situation for the carmaker and an influx of caller rivals successful Europe, arsenic Volkswagen attempts to past the transition to electrical cars.

"The concern is highly tense and cannot beryllium resolved done elemental cost-cutting measures," VW marque CEO Thomas Schäfer said connected Monday.

"This is wherefore we privation to initiate discussions with worker representatives arsenic soon arsenic imaginable to research the possibilities for sustainably restructuring the brand," helium added.

Shares of Volkswagen implicit the past 5 years.

Volkswagen's plans to see unprecedented works closures successful Germany comes astatine a politically fraught clip for Europe's largest economy. Led by Chancellor Olaf Scholz, the ruling three-way conjugation successful Berlin was dealt a dense blow successful determination votes implicit the weekend.

"The German automotive manufacture stands for globally palmy products and innovations. It is simply a cardinal pillar for maturation and prosperity successful Germany," a German authorities spokesperson told CNBC by email, without commenting specifically connected Volkswagen's planned measures.

"At the aforesaid time, it is presently successful a challenging signifier of translation towards electromobility. This besides requires the adaptation of accepted structures and measures for greater competitiveness," the spokesperson added, according to a Google translation.

"A adjacent societal concern is simply a hallmark of the German automotive industry. The Federal Government truthful appeals to the societal partners progressive to proceed to fulfil this work successful the future."

Thomas Besson, caput of automotive probe astatine Kepler Cheuvreux, said the problems astatine Volkswagen bespeak an "industry-wide story."

"We are seeing a large fragmentation communicative of the planetary automotive landscape," Besson told CNBC's "Street Signs Europe" connected Tuesday.

"The concern … is besides circumstantial to Volkswagen, successful the consciousness that they person enactment successful spot a fig of guarantees for workers," helium added.

— CNBC's Annette Weisbach contributed to this report.