Administration at German automotive big Volkswagen is about to go toe-to-toe with staff on Wednesday, as senior enterprise leaders put together to current particulars about doable cuts that would embrace historic home manufacturing unit closures.

Footage carried by Getty Photographs confirmed staff protesting on the townhall concerning the potential plans for the enterprise, waving union flags and banners with slogans saying that administration errors weren’t their fault and urging leaders to “lastly do your job,” in accordance with a CNBC translation.

“We’ve been spending extra money on the model than we earn for a while now. That does not go properly in the long run,” Arno Antlitz, chief monetary officer and chief working officer of Volkswagen Group, informed staff, in accordance with feedback shared by Volkswagen.

Annual car gross sales in Europe have gone down in comparison with the interval earlier than the Covid-19 pandemic and are set to remain decrease in opposition to that baseline, Antlitz defined. He mentioned he expects round 2 million fewer vehicles to be offered each yr sooner or later within the European market, in comparison with the pre-pandemic interval.

Antlitz estimates that Volkswagen holds round 1 / 4 of the European market share, which means that the decline interprets right into a 500,000 yearly shortfall within the firm’s car gross sales, equal to the mixed gross sales usually achieved by two of its crops.

Volkswagen on Monday warned that it was not in a position to rule out closing crops in its house nation of Germany — a measure that was beforehand thought of off the desk and has not ever been taken within the firm’s file.

The auto firm additionally mentioned it felt that its its employment safety settlement, which has been in place since 1994 and protects the workforce in Germany till 2029, may have to finish.

Hypothesis about Volkswagen website closures in Osnabrueck in Decrease Saxony and Dresden in Saxony mounted on Tuesday.

Shares of Volkswagen have been buying and selling 1.12% decrease at 11:17 a.m. London time on Wednesday morning. The agency’s inventory value has tumbled by greater than 36% over the previous 5 years.

The downturn comes amid a troublesome financial atmosphere for the carmaker together with an inflow of latest rivals in Europe, as Volkswagen makes an attempt to outlive the transition to electrical vehicles.

“It’s our joint accountability to enhance the fee effectivity of the German websites specifically. We have to enhance productiveness and scale back prices,” Antlitz mentioned. “We nonetheless have a yr, perhaps two years, to show issues round. However we now have to utilize this time.”

Volkswagen’s work council, which is comprised of workers members elected to characterize worker pursuits throughout the firm, and main German industrial union IG Metall have been extremely essential of the plan and introduced they might work in opposition to it.

Daniela Cavallo, a number one consultant of Volkswagen’s Common Works Council, earlier within the week mentioned that the group would show “fierce resistance” in opposition to the plans, in accordance with a CNBC translation. There was an understanding in place over a long time that profitability and job safety have been equal targets, however the firm had now determined to finish this deal, she mentioned.

Crucial factor now was getting an image of the long run and understanding the place the enterprise is headed, Cavallo added.

German media additionally quoted her as saying that she was anticipating the townhall of Wednesday to be totally attended, and for staff to make their frustrations clearly and loudly.

Philippe Houchois, head of worldwide autos at Jefferies, informed CNBC’s “Squawk Field Europe” on Monday that Volkswagen CEO Oliver Blume would attempt to ease the resistance in opposition to the potential plans.

“Blume is a unique breed from his predecessor. He is most likely extra of an insider and can see to what extent he is ready to, to vary a few of the resistance to, to adapt at Volkswagen,” he mentioned.

Houchois additionally mentioned that Volkswagen administration and worker representatives won’t be that far aside in the case of the fundamentals, primarily based on their feedback from current days.

“It is the query of how they, they get to an settlement or the method to really work collectively, however the endgame appears to be understood on either side,” he mentioned.

The potential points at Volkswagen come at a troublesome time for each the broader German economic system and for the nation’s auto business particularly, as an array of challenges weigh on the sector.

On Wednesday, the Ifo institute mentioned that enterprise local weather within the German automotive business pulled again once more in August, falling to damaging 24.7 factors from the earlier month’s print of damaging 18.5 factors. Enterprise expectations for the approaching six months have been “extraordinarily pessimistic,” Ifo mentioned.

— CNBC’s Sam Meredith contributed to this report.