Europe's leading car manufacturer, Volkswagen, has announced that it may shut down its Audi plant in Brussels, Belgium, due to a significant decline in demand for high-end electric vehicles. Despite substantial investments in advanced technology and the introduction of new, more affordable models, Audi has experienced a sales slump in 2024.
The potential closure or repurposing of the Brussels plant could cost Volkswagen an estimated €2.6 billion in the 2024 financial year. This has led the company to revise its profit forecast downward from 7.5% to 6.5%, while Porsche SE, another member of the VW Group, also lowered its forecast from €5.5 billion to €3.5 billion. These announcements caused share prices for both companies to fall on Wednesday.
Furthermore, according to Euronews, Volkswagen has indicated that production of the Audi Q8 e-tron may be halted in 2025 due to the dwindling demand, raising concerns about the future of the plant's workforce.
The Brussels plant has faced numerous challenges, including difficulties restructuring its layout, leading to higher production costs. Unexpected expenses, such as exchange rate losses from Volkswagen Bank Rus's deconsolidation and the closure of MAN Energy Solutions, a gas turbine company, have further burdened the plant's financial situation.
In the first half of 2024, VW's operating profits declined by 20%, partly attributed to delivery delays at the Brussels Audi plant. These delays were caused by a two-week closure in February and exacerbated by component shortages.
Audi has initiated a consultation process with the plant's nearly 3,000 employees, warning that closure is a possibility if no alternative solution is found. The outcome of this process will have significant implications for the workers and the future of EV production in Brussels.
