FRANKFURT – In a milestone event for Europe’s largest automaker, the last vehicle rolled off the production line at Volkswagen’s Dresden site on Tuesday. The closure marks the first time in the company’s 88-year history that it has completely shut down production at a domestic German factory, as the automotive giant intensifies cost-cutting measures to navigate a cooling global market.

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The Final Car

The final vehicle produced at the glass-walled “Transparent Factory” was a red electric ID.3 GTX, signed by the employees who built it. Since its opening over 20 years ago, the Dresden site has been a symbol of VW’s craftsmanship and technological transparency, though its output remained niche compared to the company’s massive industrial hubs.

“Economic Necessity”

 

Volkswagen brand boss Thomas Schaefer addressed the closure earlier this month, stating that while the decision to end vehicle production in Dresden was difficult, it was “absolutely necessary from an economic perspective.”

The company is currently grappling with a “triple whammy” of industrial challenges:

• Cratering sales in China, formerly its most profitable market.

• Sluggish economic growth across Europe.

• High capital expenditure required for the transition to electric vehicles (EVs).

Future of the Site: From Assembly to AI

While car manufacturing has ceased, the “Transparent Factory” will not be abandoned. Volkswagen plans to repurpose the facility into a specialized Research and Development (R&D) centre. The new hub will focus on:

• Semiconductors (chips)

• Artificial Intelligence (AI)

• Robotics

The Technical University of Dresden is expected to occupy approximately half of the facility to foster academic and industrial collaboration.

Concerns Over Jobs

The shutdown is part of a broader deal reached with unions last year to cut 35,000 jobs by 2030 across Germany. While Volkswagen has pledged that there will be no compulsory redundancies, the transition remains a point of friction.

Stefan Ehly, an official with the IG Metall union, expressed skepticism regarding the future of the Dresden workforce. “Stopping production was agreed, but it was also agreed that there would be a plan for the site, guaranteeing employment for all who work there. And that just hasn’t happened,” he told AFP.

In response, a Volkswagen spokesperson emphasized that “socially acceptable alternatives,” including transfer offers to other plants and termination agreements, are being provided. “There is nobody who will be left without a job,” the spokesperson said, “but there might be some people for whom we still have to work out what it is that they will do.”

Market Context

Automotive analysts suggest that the Dresden closure might only be the beginning. Pal Skirta, an analyst at Metzler Bank, noted that as VW prepares to launch low-cost electric models in the coming years, further cost reductions may be required to remain profitable against rising global competition.

The Transparent Factory previously produced about 6,000 cars annually—a fraction of the 500,000 vehicles produced at VW’s primary plant in Wolfsburg.