Leaked Volkswagen Document Exposes Massive Manufacturing Cost Gap
A leaked Volkswagen document reveals massive economic gaps between German and Chinese manufacturing, showing German hourly wages at €74 compared to €12 in Tianjin. The carmaker plans deep cuts and plant closures to survive.
Volkswagen is facing a severe structural crisis, as a leaked internal document published by Bild reveals the staggering economic gap between German and Chinese manufacturing. The carmaker's board has recently approved cutting 100,000 jobs and closing four plants in Germany in the coming years. Volkswagen has been hit by U.S. tariffs on German car imports, a decline in sales for its brands in China, and growing competition from Chinese manufacturers in Europe.
The leaked document highlights the profound anxiety gripping Western automakers as they compete with Chinese rivals whose workers earn significantly less and work much longer hours. For instance, the production cost of a single vehicle at the four German plants slated for gradual closure by 2034—Emden, Zwickau, Hanover, and Neckarsulm—stands at approximately €5,200. In contrast, producing a car at Volkswagen's plant in Portugal costs €2,385, while at its facility in Tianjin, China, it is only €1,078.
Hourly Wages and Labor Costs
The hourly cost of a worker at the Emden plant, which has been producing the electric ID.4, reaches €74. At the Palmela plant in Portugal, this cost drops to €37, while at the Tianjin plant—operated jointly with local partner FAW to produce Taycan and Audi Q3 models—labor costs are a mere €12 per hour.
According to the secret document, Volkswagen calculates average personnel costs of €163,000 per year in Germany, significantly higher than North America at €92,000, China at €74,000, or the rest of the world at €41,000. Meanwhile, working hours differ vastly: a German employee works 1,282 hours annually, compared to 1,419 hours for a Portuguese counterpart and 2,065 hours for a Chinese worker. Absenteeism rates also show stark contrasts, standing at 10.5% in Emden, 4.1% in Palmela, and just 1% in Tianjin.
Productivity and Restructuring
Labor productivity, measured in cars per worker per month, stands at 29 vehicles in Emden, 39.9 in Palmela, and 51.3 in Tianjin. To counter these discrepancies, Volkswagen reached an agreement with its powerful works council on a series of cost-cutting measures. These include canceling certain wage bonuses and paid vacation days, delaying pay rises from 2027 to 2030, and introducing a 40-hour workweek without additional compensation.
The bottom line in the secret document is unequivocal: "The continued economic viability of the Volkswagen Group is only possible with drastic cuts."
If the targeted plants achieve competitive cost reductions by the end of June 2027, Volkswagen plans to explore alternative uses for them. These options include shifting to defense manufacturing, bringing in Chinese producers, or even manufacturing Chinese Volkswagen models like the UNYX at German facilities. According to company calculations, closing the plants will generate a net profit of €2.9 billion by 2038, whereas continuing operations under current conditions would result in a €1.3 billion loss.
