Volkswagen has been struggling with its electric cars for some time now. Now even the Audi plant in Brussels is in jeopardy due to low demand. And the Wolfsburg-based company is also facing millions in compensation payments in Russia.
Volkswagen is putting its plant in Brussels under review due to weak demand for its luxury electric car, the Audi Q8 e-tron. The VW subsidiary Audi has initiated an “information and consultation process” for the plant in order to find a solution for the site with around 3,000 employees. “This could also lead to a cessation of operations if no alternative is found,” Audi announced yesterday evening. If the production facility were to close, it would be the first time in decades that Volkswagen has closed a plant.
Company sources said the Q8 e-tron could be taken out of the range over the course of next year. The model has been on the market since 2018 and is Audi’s oldest electric vehicle. It is now facing competition from vehicles on the new premium platform, such as the Q6 e-tron, which is now on the market after years of delay. Audi did not reveal how long it will take until a decision is made about the plant in Brussels.
“Valiant and sustainable solution”
A company in Belgium cannot simply close a plant, but must first negotiate possible alternatives under current law. This process, also known as the “Renault procedure”, was introduced at the end of the 1990s after the unexpected closure of a Renault plant led to turmoil. Works council circles said that the difficult situation in Brussels had long been an issue beyond Audi. At the meeting of the VW global works council, the works councils presented the board with a declaration of solidarity.
Rita Beck, spokeswoman for the Audi Committee in the European VW Group Works Council, said on Tuesday that the employee representatives are demanding a future-proof perspective for the plant and its workforce. “We hope that a viable and sustainable solution will be developed in the course of the decision in the consultation process that has now been initiated.”
The plant in Brussels has long been considered a problem child for the group. Production costs there are higher than at other locations, partly due to its location in the urban area of the Belgian capital.
Billions in costs
The VW Group is now preparing for additional costs amounting to billions, partly due to the burdens caused by the Brussels plant. The group will face costs of 2.6 billion euros, including provisions for staff cuts at the core VW passenger car brand amounting to 0.9 billion euros.
Volkswagen announced that the operating return on sales this year would be between 6.5 and 7 percent, half a percentage point lower than previously forecast. The company will provide details when it presents its quarterly figures on August 1. The company’s shares fell after hours. Volkswagen preferred shares fell by 1.1 percent on the Tradegate trading platform compared to the Xetra close.
Million-dollar Compensation payment to Gaz
And further news from Russia could cause financial burdens: A Russian court has sentenced Volkswagen to pay millions in damages to its former partner Gaz. The court in Nizhny Novgorod on the Volga partially upheld a claim by Gaz on Tuesday and sentenced VW to pay 16.9 billion rubles (around 177 million euros), Europe’s largest carmaker confirmed in response to a request from dpa.
“The judgment is not yet final and the reasons for the judgment are not yet available,” explained a company spokesman. “We will examine and evaluate the reasons for the judgment in order to decide what further legal steps we will take.” Gaz sued VW for damages in early 2023 after VW withdrew from Russia and terminated its cooperation with Gaz. Several models of the VW core brand and the Czech subsidiary Skoda were assembled at the Gaz factory in Nizhny Novgorod.