VW to suspend production at Dresden plant in March image

Volkswagen cut costing strategy will affect the Dresden plant in Germany, as the automaker will cease the production of its Phaeton saloon from next year.

The Phaeton project has not been a success story for Volkswagen, as the model has the smallest-volume sales in the company’s global line-up and never met sales targets since coming to market in 2002. Consequently, the production in Dresden fell 30 percent in 2014 to just over 4,000 cars, according to VW’s annual report. On top of that, the development of the Phaeton cost more than 1 billion euros. Therefore, the decision of ceasing production is understandable especially because of emissions scandal costs. The building of the Phaeton, assembled by 300 of the Dresden transparent plant’s 500 workers, will end in late March. The site, the smallest of VW’s ten German factories, will then be reconfigured for about a year to prepare for producing an all-electric Phaeton by about 2019.

“Production in Dresden will be suspended during the restructuring phase,” Jens Rothe, head of the works council of VW’s operations in Saxony, said on Wednesday, adding that the plant would be awarded a new product for when it reopens, ensuring “employment will in future be secured on today’s level”. Rothe said production staff in Dresden affected by the shutdown will need to commute to Zwickau, about 120 km (75 miles) west of Dresden, where VW builds the Golf hatchback and the Passat saloon. The Wolfsburg-based company will also cut about 600 temporary jobs next year at the Zwickau factory, labor representatives said this week. The plant will force employees to take mandatory holiday.

Via Reuters