At the beginning there was the Dieselgate scandal, born Volkswagen-gate and cleverly renamed in the Merkel era in order to involve more European players in paying a price that would have left the historic German company broke. It was the beginning of the end, the admission of not being able to follow the policy in its desire to reduce emissions regardless of the laws of physics and available technology. Now Volkswagen has admitted that it will not be able to cut costs by ten billion euros, cuts needed between now and 2026 to address the electrification of the range. And to get at least a few more, maybe three at most, it does not rule out closing a couple of plants including assembly sites and component manufacturing. There is more: another thirty billion are needed for compensation due worldwide for the lawsuits filed for Dieselgate. CEO Thomas Schäfer used these words: “The situation is particularly difficult, simple cost reductions are not enough”. He is right, even the situation of a German economy in crisis does not help, as the CEO of the group Oliver Blume underlined: “The arrival of new competitors in Europe and the competitiveness of the German economy that has decreased also count”. If this were to happen, thousands of jobs will inevitably be lost (Volkswagen has 300,000 in Germany, 650,000 worldwide), despite the signing of an agreement with the unions that provided for no layoffs until 2029. The reactions to this news were immediate. The union Ig-Metall and the representative for Saxony Thorsen Groeger announced that “the company’s board of directors has presented an irresponsible plan that threatens workers and factories” and that “plans that are detrimental to the workforce and cause crises in these areas of the country will not be tolerated”.
Meanwhile, nine years after the events, the Dieselgate trial began on September 3 in Braunschweig, with the former CEO of the German car manufacturer Martin Winterkorn appearing in the dock for the first time. Volkswagen, once seen as a symbol of German economic success and engineering prowess, has been found guilty of falsifying emissions tests that made its vehicles appear significantly more environmentally friendly than they were. Winterkorn, 77, denies the charges in the trial, which he denies knowing about the manipulation long before it was made public, supporting the software manipulation and trying to cover it up. The 600-page indictment includes damaging Germany’s long-standing international reputation for high-quality products. Lawyer Felix Dörr, representing Winterkorn, told the court: “Our client has not defrauded or harmed anyone. He has not deliberately left the capital markets in the dark so that investors would be harmed and he has told the truth to the investigation committee.”
It is worth remembering that the scandal emerged after US homologation experts declared in autumn 2015 that many of Volkswagen’s diesel-engined cars had been equipped with software that deliberately falsified emissions tests. The problem affected nearly nine million vehicles worldwide, costing car owners hundreds of millions of euros in total. Winterkorn faces a fine and a prison sentence if found guilty in the trial, which is due to end in May 2025, but due to his poor health he did not appear at the start of the 2021 hearings, when four other former executives and engineers at the group were charged. The charges were dropped in that trial after the company agreed to pay a fine of nine million euros.
Meanwhile, economic data shows that the German manufacturing sector has been in recession since the beginning of 2022.hit by the loss of energy availability resulting from the purchase of cheap Russian gas following the invasion of Ukraine, but also by a drop in demand in its main export market, China, as well as by the decline in domestic consumer confidence. The danger is that there will be a domino effect on sectors tangential to the automotive sector, such as electronics: a further negative signal comes from the American Intel, also in difficulty, which is considering blocking the construction plans of its 30 billion euro factory in Magdeburg, in eastern Germany, for which 9.9 billion euros had been allocated by Berlin in June last year.
