Volkswagen to close Dresden plant for first time in 88-year history

Volkswagen will cease vehicle production at its Dresden plant after December 16, marking the first time in the carmaker’s 88-year history that it shuts down a manufacturing site in Germany.

The closure comes as Europe’s largest carmaker faces financial pressures from weak sales in China and Europe, alongside US tariffs that have affected American demand, Caliber.Az reports, citing the Financial Times (FT).

The company has been navigating how to allocate its €160 billion investment budget over the next five years, with petrol-engine vehicles expected to have longer lifespans. This rolling budget, updated annually, has been trimmed in recent years; for 2023–2027, the budget was €180 billion.

Since its opening in 2002, the Dresden plant has produced fewer than 200,000 cars—less than half the annual output of Volkswagen’s main Wolfsburg factory.

The closure is a step toward reducing Germany’s overall production capacity. It follows a union agreement reached last year that also includes 35,000 job cuts across the VW brand in the country.

Thomas Schäfer, the brand chief, said this month that the decision to close production had not been taken “lightly,” but that “from an economic perspective it was essential.”

The facility will be leased to the Technical University of Dresden to create a research campus focused on artificial intelligence, robotics, and semiconductor development.

Volkswagen and the university plan to invest €50 million into the project over seven years, while the carmaker will continue using the site for car deliveries and as a tourist destination.

By Jeyhun Aghazada