BERLIN: Volkswagen’s showdown with powerful labor leaders over how to tackle spiraling costs at underused German factories has triggered intense soul-searching about the root causes of the carmaker’s problems. Complex governance structures, misjudged investments in EVs, poor management decisions, sliding revenues from China and Germany’s crippling bureaucracy have all variously been blamed for the challenges facing the world’s second-biggest automaker.

Yet a Reuters review of factory capacity utilization data across Europe for six carmakers shows that Volkswagen is hardly an outlier and it may be in a better place than some of its major rivals when it comes to underused plants.

Renault and Stellantis, for example, both have lower average capacity utilization rates in Europe than VW, according to the figures compiled for Reuters by GlobalData, which included numbers for BMW, Ford and Mercedes-Benz as well.

Reuters also sourced data for all automakers in eight major European car-making countries: four in higher-cost states - France, Germany, Italy and the UK - and four in lower-cost countries - Czech Republic, Slovakia, Spain and Turkey. That data showed that there was a clear tendency towards higher factory utilization rates in central and eastern Europe, where costs are lower, suggesting the problems most of the big automakers face are mainly in their home markets. Across Europe, the capacity utilization of factories making light vehicles such as passenger cars was 60 percent in 2023, down from 70 percent in 2019, the data showed. In the lower-cost countries, the average utilization rate slipped only slightly to 79 percent from 83 percent, but in the higher cost countries, plant use dropped to just 54 percent from 65 percent.

Volkswagen, Stellantis and Mercedes-Benz said they don’t comment on capacity utilization data. Renault said it uses a different benchmark that shows a higher number for its plants. BMW also said the data may underestimate its actual levels. For Volkswagen, pressure by German unions and politicians to make its EVs at home - a move designed to future-proof jobs - has become a “poisoned chalice”, said Justin Cox, director of global autos production at GlobalData, a data analytics provider based in London. — Reuters

That decision means the automaker is now using its most expensive locations to make high-cost EVs, which are not selling in the numbers expected, Cox said. “Premium costs and mobility for all are not compatible. This applies in particular to our German plants, which currently build the majority of our electric vehicles,” Volkswagen CFO Arno Antlitz said in response to questions from Reuters.

Germany had the highest wages for factory workers in the automotive industry by international comparison at 59 euros ($66) per hour in 2022, according to German autos association VDA, in contrast to 21 euros in the Czech Republic and 16 euros in Hungary. In China, wages hover around just $3 an hour, according to a Reuters analysis. At the same time, new car sales in Europe are struggling. They fell 18 percent in August to their lowest in three years, dragged down by a 44 percent drop in overall EV sales - which included a 69 percent slump for German EV sales. “We are calling for Volkswagen to bring out more models that normal consumers can afford - a cheap electric car or cheap combustion engine that’s sustainable,” said Stephan Soldanski, a union representative in the German city of Osnabrueck, where one of VW’s most underused plants is located. That plant is running at about 30 percent of its capacity, Soldanski said. The three models it makes - the Porsche Boxster, Porsche Cayman and the VW T-Roc Cabriolet - are all set to end by 2026 and unions have not heard what they will make next. Under current labour agreements, if VW workers are idled, they continue to be paid.

“We need ideas,” Soldanski said. “We don’t want a slow death.” — Reuters