Volkswagen is considering closing several of its plants in Germany as the automaker grapples with the rapid growth of Chinese-made cars in Europe. VW’s CEO, Oliver Blume, recently highlighted the “serious situation” facing the European automotive industry, driven in large part by the influx of low-cost vehicles from China.

Chinese automakers have quickly gained a foothold in the European Union (EU), with their market share reaching 11% in June. These cars, often heavily subsidized by the Chinese government, are being sold at prices that undercut European competitors. As a result, Volkswagen is now contemplating the closure of some of its German plants for the first time in its history.

The potential plant closures could lead to significant job losses and the removal of job protections for German auto workers. This would mark a major shift for Volkswagen, which has not closed a plant globally since shutting down its Westmoreland, Pennsylvania, facility in 1988.

In response to the surge in Chinese electric vehicles (EVs), the EU has implemented temporary tariffs on these imports. However, projections suggest that China-made EVs could soon account for 25% of all electric vehicles sold in Europe, further intensifying the competition for European automakers.

Volkswagen’s presence in China has also been a source of controversy, particularly in the Xinjiang region, where the company has faced criticism for operating in an area associated with human rights abuses. Despite these concerns, VW has defended its business operations in the region, citing economic reasons.

As the European automotive market continues to feel the pressure from Chinese competition, Volkswagen’s potential plant closures could signal a broader restructuring within the industry.