Has automotive crisis spread from Germany to US?
Car bodies are lifted at "Factory 56", one of the world's most modern electric and conventional car assembly halls of German carmaker Mercedes-Benz, in Sindelfingen near Stuttgart, Germany, March 4, 2024. (Ruters/Wolfgang Rattay)
By Ali Celik — As the repercussions of Volkswagen Group’s plans to close factories and cut salaries in Germany continue to unfold, a similar development is brewing in the United States. Automaker Ford insiders disclosed that it will reduce bonuses of all executives by up to 65% if company performance does not improve. Ford stocks have fallen by more than 10% in the U.S. stock markets.
The automotive industry is going through stormy days. The decline in sales, especially in the European market, began impacting global giants. When the VW Group lost its dominance as the top seller to Tesla and BYD, danger bells began ringing in Germany’s largest automotive company.
Following substantial fines, particularly in the U.S. after the 2015 “Dieselgate” emissions scandal, VW has now announced plans to close three factories in Europe. The decision stems from software challenges related to electrification, battery production and China’s abrupt retreat from global markets.
Decision to close factory sparks union backlash
Meanwhile, Audi’s announcement to close its Brussels factory sparked union backlash. When VW mentioned possible salary cuts across all group brands, some groups, including Porsche employees, began preparing for a strike.
In the last week of September, strikes began spreading across many factories in Germany.
‘Not satisfied at all’: Ford CEO Farley
On Monday, Ford CEO Jim Farley discussed plans for a performance- and bonus-based system aimed at changing the culture of the 121-year-old automaker and increasing employee accountability.
Farley during the third quarter earnings presentation stated, “I’m proud of the progress but we’re not satisfied at all.”
