The German government intends to stop domestic plant closures at Volkswagen, Europe's largest carmaker, according to a spokesperson on Monday, although stressing that the decision ultimately depends on the embattled company.
The automaker, under pressure from Chinese rivals, U.S. tariffs and dwindling demand in Europe, is considering shutting four German factories and ramping up job cuts to as many as 100,000, two people familiar with the matter said on Friday.
Closures at such a major industrial group would deal a further blow to the German government's efforts to revive a sluggish economy and improve weak poll ratings.
"Our aim is to prevent the closure of sites in Germany," the spokesperson said.
"To achieve this, the right framework conditions must be in place, including the necessary competitive mechanisms. Incentives must be provided to ensure that these sites remain profitable," he said.
"In principle, however, it is always up to the companies to make these decisions on commercial grounds."
Volkswagen's plans, which the company has not made public, are likely to face strong opposition from unions and the state of Lower Saxony, its second-largest shareholder. The federal government holds no stake in the Wolfsburg-based group.
The proposals are due to be discussed at a July 9 supervisory board meeting, which includes employee representatives.
Management has so far told staff that agreed job cuts are insufficient, according to a works council note seen by Reuters on Monday, with further reductions yet to be quantified.
