Berlin, December 16, 2025 (Agencies) – Germany’s largest automaker, Volkswagen, is preparing to cease production at its Transparent Factory in Dresden on Tuesday, marking the first time in the company’s 88-year history that it has shut down a production line in its home country.
The closure comes as Volkswagen struggles with mounting cash flow pressures driven by rising energy prices, weak sales, and U.S. tariffs. The Transparent Factory, which has produced more than 165,500 vehicles since its launch in 2001 and specialized in electric cars in recent years, will now be idled.
Volkswagen brand chief Thomas Schafer said earlier this month that the decision, though painful, was necessary “from an economic perspective.” The move follows last year’s announcement that the automaker would cut 35,000 jobs and reduce production capacity in Germany.
Volkswagen has reported a significant slump in profits due to declining sales in Europe, China, and the United States. Other German carmakers, including BMW and Mercedes-Benz, have faced similar challenges this year.
Industry analysts point to rising energy costs as a major factor weighing down the sector. Following the escalation of the Ukraine conflict in 2022, the European Union reduced imports of Russian oil and gas, turning to more expensive alternatives. Competition from Chinese manufacturers and U.S. tariffs have further compounded the difficulties.
In late October, Clemens Fuest, head of the Munich-based ifo Institute, warned that Germany’s economic decline was becoming “dramatic.” Chancellor Friedrich Merz acknowledged in August that the country had entered a “structural crisis,” with large sectors “no longer truly competitive.”
The Dresden plant’s closure underscores the mounting pressures on Germany’s automotive industry and signals a historic turning point for Volkswagen as it grapples with global economic headwinds.