(Bloomberg) -- Volkswagen AG may downsize a small plant in Eastern Germany as part of a drive to cut costs and increase profit at the company’s namesake mass-market brand.
Ending production at the Gläserne Manufaktur in Dresden is one of several options under consideration though no final decision has been made, according to two people familiar with the plans, who asked not to be named during ongoing discussions. The site, which employs roughly 300 full-time workers that make electric ID.3 models, was originally set up as a showcase facility under VW’s late former Chief Executive Officer Ferdinand Piech.
The German carmaker plans to stop production at the plant, Automobilwoche reported on Sunday. The workers in Dresden could be shifted to other roles or locations as part of a broader revamp, people familiar with the talks told Bloomberg News. A spokesperson for VW declined to comment on speculation.
CEO Oliver Blume is aiming to lift returns at the long-struggling Volkswagen brand to 6.5% for a €10 billion ($10.7 billion) increase in profit by 2026. The maker of the Golf, Polo and ID. cars series is competing with more profitable carmakers such as Stellantis NV in the transition to electric cars. In Europe, the VW brand’s mainstay market, consumers are feeling the strain from higher living costs amid a surge interest rates.
The Dresden assembly plant started operations in 2002 as a showcase site to allow customers to see the final construction of high-end models. The location has no body manufacturing, paint shop or pressing plant.
The annual operating cost of the facility ranges between €60 million to €70 million, and ending vehicle production at the Gläserne Manufaktur would save around €20 million a year, according to one of the people.
Volkswagen said last week it’s cutting temporary workers at its Zwickau site, its main electric-vehicle factory in Germany, after a phaseout of a subsidy in the country caused demand for its EVs to drop. The fate of around 2,000 additional temporary staff there remains uncertain.
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