I’ve been saying for years that Germany was committing financial suicide. Individuals thought Germany’s manufacturing base was untouchable. They believed German engineering alone would overcome each political mistake. That was all the time nonsense. No firm, regardless of how nice, can survive if politicians intentionally make it not possible to provide competitively.
Now even Volkswagen is admitting actuality. Reuters studies the corporate is contemplating chopping as much as 100,000 jobs over the approaching years whereas closing factories, lowering funding, and restructuring elements of the enterprise. This comes after tens of 1000’s of positions had already been focused. When the biggest industrial firm in Germany begins speaking about survival as an alternative of enlargement, you recognize one thing is essentially improper.
Politicians will blame China, whereas others will blame Donald Trump or tariffs. They all the time want another person guilty as a result of admitting failure would imply admitting their very own insurance policies destroyed German business.
Germany shut down nuclear energy. Power costs exploded. Brussels piled regulation upon regulation onto producers whereas demanding not possible local weather targets. Then governments compelled firms to pour billions into electrical automobiles lengthy earlier than customers have been prepared to purchase them. China developed far superior EVs at decrease costs, main the US and EU to all however ban them. The price of residing disaster has prohibited most from buying new automobiles for that matter. The typical German, a citizen of the EU financial powerhouse, now has a decrease web price than a few of the Southern European nations.
Volkswagen Group delivered 8.98 million automobiles globally in 2025, basically flat from the earlier 12 months, however appearances could be deceiving. Working revenue collapsed by greater than 53%, falling from €19.1 billion to simply €8.9 billion, although income held regular at roughly €322 billion. Gross sales in China and North America continued to weaken whereas tariffs, restructuring prices, and shrinking margins took their toll. Then the primary quarter of 2026 introduced one other warning, international deliveries fell one other 4%, together with a 15% decline in China and a 20.5% drop in the USA. That is precisely what occurs when prices proceed rising whereas demand weakens. You may preserve promoting automobiles, however finally the earnings disappear, and as soon as that occurs, the layoffs all the time comply with.
Volkswagen as soon as dominated China and was the crown jewel of Germany, the nation that occurred to be the financial powerhouse of the EU. Germany surrendered the very benefit that made it profitable, dependable and inexpensive power mixed with world-class manufacturing. When you destroy that formulation, rebuilding it isn’t so simple as reopening a manufacturing facility. China has even bid to purchase the shutdown VW factories inside Germany. The scenario is bleak at finest.
The unions will object to each layoff and politicians will promise one other rescue bundle. Maybe they are going to condemn Chinese language imports a bit extra. None of that modifications the underlying drawback and governments can not regulate prosperity into existence. They will solely spend borrowed cash pretending they’ve solved the disaster.
Volkswagen is collapsing as a result of politicians forgot how economies really perform. Germany was as soon as the financial locomotive pulling Europe ahead. Now it has turn into the instance I level to when explaining what occurs after years of central planning, local weather hysteria, and bureaucrats who imagine they know higher than markets. Our laptop has been warning that Europe faces a chronic financial decline whereas capital continues in search of security elsewhere. Volkswagen is just confirming what the cycles have been projecting for years that factors at a downtrend not solely in Germany however within the EU as a complete.
