Volkswagen's warning last week of job cuts and potential production line closures in its home market for the first time in its 87-year history sent shockwaves through the country.

The storm clouds for Germany's largest carmaker have, however, been forming for several years, due to soaring production costs, a weaker domestic economy post COVID-19 and intense competition from China. VW's faltering electric-vehicle (EV) strategy is adding to the company's revenue woes.

The automaker must make some €10 billion ($11.1 billion) in cost savings over the next three years, which could mean thousands of job losses and the likely shutdown of some of its 10 German assembly lines.

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VW's painful reforms can be seen as part of the broader challenges facing Germany's €4.2 trillion economy, where supply chain disruptions, the energy crisis — particularly due to the reduction in Russian gas supplies — and loss of competitive edge have hurt growth.

"Volkswagen represents the success of German industry over the last nine decades," Carsten Brzeski, ING bank's chief economist for Germany, told DW last week. "But this story tells us what four years of economic stagnation and 10 years of deteriorating international competitiveness can do to an economy. They make investments less........

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