The auto industry around the world is facing a major challenge from Chinese EV carmakers and that will fundamentally change the existing structures. For those who have lived with the existing order, change is relatively easy to see, but it is more difficult to live through. In the world, the biggest 2 automakers are Toyota from Japan and Volkswagen from Germany.

In an article by Christina Amann of Reuters, VW is considering shutting down 4 German factories which would close 4 factories in Hanover, Zwickau, Emden, and Neckarsulm that would put up to 45,000 jobs at risk. That would add to the 50,000 cuts argued to unions in late 2024. Similar to auto plants in America when an auto plant closes down the community where it is located suffers.

The cuts are likely to face strong resistance from unions and the state of Lower Saxony, which is the carmaker’s 2nd largest shareholder.

Porshce SE, the investment vehicle of the Porsche and Piech families and VW’s biggest shareholder. In 2025, financial year the global work force was 667,164 with almost 43% employed in Germany.

Oliver Blume, VW’s CEO plan to restructure the company would include cutting planned investment by about 15% to just over $148 billion over the next 5 years. There are possible spinning off the core of VW brand and parts operations into separate entities.

Linking to dividend paying stocks, the advantage these companies have when there is fundamental change in an industry is the resources to do something about it. They can spend their way either to meet the competition or buy into the competition or something of that nature to preserve their position. Sometimes the money is wasted, sometimes the money is invested well, it depends and only time will tell. As an investor what story do you subscribe to and is the company able to respond well to your story?

There are more questions than answers, till the next time – to raising questions.