While Germany is shaking due to the Volkswagen crisis, Italy is cutting funding for the automotive sector

While Germany is shaking due to the Volkswagen crisis, Italy is cutting funding for the automotive sector

Strikes begin in Germany following the announcement of the Volkswagen automotive group to close three plants in the country, putting tens of thousands of jobs at risk: the first mobilization was started by the German trade union Ig Metall in the early hours of today, Tuesday 29 October , while collective sector negotiations are underway. Negotiations that impact almost 4 million workers in Germany employed in the automotive industry and related industries.

The strikes against the closure of Volkswagen factories

It had been in the air for some time, but the announcement of the possible closure of three Volkswagen plants has created an earthquake in Germany, where the automotive giant employs 120 thousand people, spread across ten plants. The decision sparked protests across the country, with demonstrations in various locations. The union is demanding a 7 percent wage increase over 12 months, while employers have offered a 3.6 percent increase in two stages over 27 months, with the first increases in July 2025. The Volkswagen plant is also involved in the city ​​of Osnabrück, in northwestern Germany, which employs around 2,500 workers, and which recently lost a hoped-for order from Porsche. “The production lines are at a standstill and the offices are empty,” reports IG Metall district manager Thorsten Gröger.

The Italian government cuts the automotive fund

Meanwhile, in Italy the association that brings together the entire automotive supply chain (Anfia) highlights how the government in the 2025 budget has cut aid to companies in the sector by reducing as much as 4.6 million euros from the fund dedicated to the car. The government is trying to calm the waters, ensuring that Italy’s support for the sector will continue, particularly in the components sector.

“The hope is to see the cut in the approval process of the maneuver in Parliament significantly reduced. Otherwise, this tragic reduction in resources would mark a profound fracture in the excellent collaboration between the supply chain and the Government up until now”, he said. Anfia announced in a note.

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On the trade union side, Fim, Fiom and Uilm express “deep concern and firm opposition” to a cut “equal to 80% of the expected resources”. On the subject, the Minister of Business Adolfo Urso tried to defuse the situation by guaranteeing: “All resources will go towards production investments with particular attention to components which are the true strength of Made in Italy”.

The industry’s mistake: electric cars are too expensive

At the center of the debate on the Volkswagen crisis, as well as the entire sector, there is also the controversial regulation launched in 2023 by the European Union, which prohibits the sale of combustion engines starting from 2035, effectively imposing a progressive but decisive transition to electric.

However, several experts speak of an “announced crisis” with the entire automotive sector too slow in the electric transition, also guilty of poor choices regarding investments in high-end vehicles that do not meet the needs of the European market. Thus, while a large part of European citizens would like to go electric, but at affordable prices, car manufacturers do not offer valid alternatives.

“In 2020, the average price of an electric vehicle in Europe was around 40 thousand euros (excluding taxes). Today it is around 45 thousand euros. A jump of 11%”, wrote Lucien Mathieu, an expert in the sector, in a recent report automotive sector of the Transport & Environment organisation.

This is despite battery prices hitting record lows, falling 33% since 2020. “The reality is much simpler: Automakers are prioritizing larger, more profitable electric vehicles as part of their profit-maximizing strategy , rather than focusing on affordable mass models,” concluded Mathieu.