Volkswagen plant's new recycling hub does little to ease closure fears

Volkswagen AG

28/10/2026 09:00

    * Volkswagen presents scheme to dismantle and recycle cars
    * Project employs only a fraction of site's 8,000 workers
    * Factory is flagged for closure from 2031 under
restructuring 
    * Job losses threaten further boost to far-right in German
region

    By Rachel More
       ZWICKAU, Germany, Oct 28 (Reuters) - Volkswagen's
all-electric car plant in Zwickau unveiled a new recycling
facility for components on Wednesday, highlighting a potential
future business line even as the site faces possible closure
from the early 2030s under the group's restructuring.
    Hit by the loss of its decades-long dominance in China and
mounting competition from Chinese competitors in Europe,
Volkswagen  VOWG_p.DE  is pressing ahead with deep cost cuts,
including plans for 100,000 job reductions and the possible
closure of four German plants.
    Zwickau is among the sites under threat, with no vehicle
production currently planned beyond 2031, casting a shadow over
Wednesday's launch of Volkswagen's first "Circular Economy Hub"
at the factory in the eastern state of Saxony.
    Volkswagen said 100 workers had been retrained and would
begin dismantling 4,100 vehicles a year at the site from 2027.
    "For us, dismantling and recycling doesn't mean a junkyard —
it means creating value," said Thomas Schaefer, the CEO of
Volkswagen's volume brands.
     
    A 'PILOT PROJECT' FOR NOW
    The project was awarded to Zwickau in a bid to secure up to
1,000 jobs over the longer term. Volkswagen plans to invest up
to €90 million ($100 million), while the regional government has
pledged €10.7 million.
    But the initiative offers only limited relief for a site
where around 8,000 jobs are at risk under Volkswagen's overhaul
announced in July. Production shifts are also expected to create
excess capacity from mid-2026.
    With support for the far-right opposition running high,
Saxony's government is under pressure to protect an auto
industry linked to one in four jobs in the state.
    State Economy Minister Dirk Panter said the new facility
showed Volkswagen was working with employees and the region to
find durable solutions for the sector's future.
    "The circular economy for automotive components opens up new
business opportunities, creates additional value and offers
long-term employment prospects," Panter said in a statement.
    However, company sources and industry observers said the
recycling venture alone would not secure the plant's future.
    Henning Wilts, a circular economy researcher at Germany's
Wuppertal Institute, said the Zwickau hub remained an experiment
whose commercial viability had yet to be proven.
    "This is a pilot project that you launch to see if it's
scalable and if it's really an investment that will pay off
quickly enough," Wilts said, adding: "It is certainly not the
answer to all the questions in the European auto industry."
    ($1 = 0.8981 euros)

    (Reporting by Rachel More. Editing by Mark Potter)
 ((rachel.more@thomsonreuters.com))