German automaker Volkswagen is closing its Dresden plant today, marking the first time in the automaker's 88-year history that it has ceased production at a plant in Germany, according to a Financial Times report. The decision reflects growing pressure on the automaker amid weak demand in key markets and ongoing efforts to cut capacity at home.
The closure comes as Volkswagen faces cash flow constraints caused by slowing sales in China, weak demand in Europe and the impact of U.S. tariffs on auto sales in North America.
The Dresden plant closure is part of a broader cutback capacity
The Dresden plant, which began production in Total production of fewer than 200,000 vehicles in 2002, less than half the annual output of Volkswagen's main plant in Wolfsburg. The move represents a limited but symbolic move in Volkswagen's broader plan to cut production capacity in Germany.
The production stoppage is part of an agreement reached with unions last year under which the Volkswagen brand is expected to cut 35,000 jobs in Germany over time. However, the decision was not taken lightly but was considered economically necessary, the company said.
Once vehicle production ends, the site will be leased to the Technical University of Dresden, which plans to create a research campus focused on artificial intelligence, robotics and semiconductor technology. Volkswagen and the university have pledged to invest €50 million in the project over the next seven years.
Despite the halt in production, Volkswagen said it will continue to use the facility to deliver cars to customers and as a tourist attraction.
