In the first six months of 2024, it declared bankruptcy as much as 25 percent more German companies than in the same period of 2023. According to forecasts, the situation is to proceed to deteriorate. The Volkswagen automotive company is first considering closing factories in its home country. Before that, it was unthinkable, and the unionists disagree.
The national Statistical Office (Destatis) points out that only in August the number of insolvency proceedings increased by 10.7 percent over Oder compared to the erstwhile year. "Beyond June 2024 (+6.3 percent) the rate of growth [of bankruptcy proceedings — ed.] has so remained at a two-digit level since June 2023", the institution indicates.
According to Jonas Eckhard, who deals with bankruptcy, the situation will deteriorate further. The second half of the year is expected to bring “a company bankruptcy storm”, suggests the paper “Die Welt”.
These events well predicted the world's largest credit insurer Allianz Trade. The company estimates that bankruptcy will increase by 21 percent to around 21,500 cases, after a 22-percent progression recorded last year.
Not only tiny or medium-sized companies are falling, but besides large corporations with yearly turnover of at least EUR 50 million, which “warms” Germans.
In the first half of 2024 40 specified cases were recorded, the most in this period since the decade and by more than 1 3rd more than in the same period last year.
The collapse of large companies results in a domino effect and a disruption of supply chains, putting another companies at hazard of collapse.
The construction, retail (especially fashion and textiles) and services sectors are to be peculiarly threatened.
The German local courts declared 10,702 bankruptcy this year, an increase of 24.9 percent compared to the first half of 2023. Creditors' claims for bankruptcy amount to around EUR 32.4 billion – about EUR 13.9 billion more than a year ago.
Most bankruptcies afraid transport and storage, construction, services, especially temporary work agencies and hotel industry.
Consumer bankruptcy is besides noted in addition to companies. In the first half of 2024 there were 35,371 of them. It's about people incapable to repay their debt. That's almost 7 percent more than in the same period last year.
Volkswagen is presently having major problems, considering closing its German plants, which are opposed by trade unions.
The company's board tried to convince workers that everyone had to take "common responsibility" to reverse the situation in the German automotive giant crisis.
Until recently, the anticipation of closing plants in Germany has not been considered. Daniel Cavallo, a typical of the General Plant Council of Volkswagen, warned that the solutions proposed by the car manufacturer's management were not only a disgrace, but besides a declaration of bankruptcy.
Oliver Blume, CEO of Volkswagen Group, said that the current situation in the company "affects everyone emotionally, including him personally." He pointed out that the automotive manufacture has changed "greatly" in fresh years and it is hard to keep profitability. Financial manager Arno Antlitz explained to unionists that for any time the company spends more than it earns. The request for cars has decreased after the "Covid-19 pandemic" and is expected to stay lower than the baseline level. Antlitz expects about 2 million cars to be sold annually on the European marketplace in the future compared to the pre-pandemic period.
Since Volkswagen has about a 4th of the European marketplace share, this means that sales fall by about half a million copies per year. That's as much as 2 of this company's plants produce in 12 months.
Traders do not want to hear about the unprecedented step that the board intends to take, namely the liquidation of parts of national establishments and the termination of the employment protection agreement, which has been in force since 1994 and was intended to defend workers in Germany until 2029.
The next 2 years are to be crucial for Volkswagen, who wants to adapt to unstable marketplace realities, primarily improving cost efficiency.
The situation in the company is very closely followed by German Chancellor Olaf Scholz.
Sources: brusselssignal.com, cnbc.com
AS
