German Cars

With Record Sales, German Automakers Move to Cut Production Costs at Home

car manufacturing
  • Why it matters

    Why it matters

    Germany’s auto industry has traditionally been a mainstay of the economy, employing hundreds of thousands of people. As carmakers increasingly move factories abroad, there are concerns that German plants are too costly.

  • Facts

    Facts

    • Volkswagen has announced a cost-cutting program of €5 billion a year until 2017.
    • Daimler has said it wants to achieve savings of €2 billion a year.
    • The auto industry currently employs 750,000 people in Germany.
  • Audio

    Audio

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As Germany’s biggest carmakers book record global sales, the same companies are looking to cut costs aggressively at home – where rising levies for energy and labor are beginning to threaten jobs.

While Volkswagen, Daimler and BMW have been investing massively abroad in recent years, costs in Germany have spiraled, causing concern that future profitability will be hit by rising domestic expenses.

“The industry is living off the successes of the past,” said Stefan Bratzel, the director of the Center of Automotive Management, an industry consultant in Bergisch Gladbach.

Carmakers want to arm themselves now for the challenges ahead.

Auto production in Germany has become increasingly costly, due to rising wages, more expensive energy and tougher environmental standards. Now automakers are looking to modernize factories to make them more efficient and also find ways to reduce costs.

The key, however, will be persuading Germany’s powerful labor unions to agree to the cuts.

On Wednesday Martin Winterkorn, Volkswagen’s chief executive, is set to appear before 17,000 auto workers at VW headquarters in Wolfsburg.

 

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