FRANKFURT -- Volkswagen is considering the closure of its so-called "transparent factory" in Germany that builds the VW Phaeton sedan as the embattled automaker seeks to reduce costs, a business magazine reported.
VW's supervisory board will discuss the factory's future on Friday as part of the automaker's next spending and investment program. One option is to shutter Dresden and transfer its 500 employees to other plants in Germany, financial weekly WirtschaftsWoche reported.
The plant builds just eight Phaetons a week, the magazine said. New VW CEO Matthias Mueller wants to close the factory next year and move Phaeton production to a plant that builds similar Audi and Porsche models, WirtschaftsWoche said on Thursday.
VW neither confirmed nor denied the report when contacted by Automotive News Europe. The automaker said "various scenarios" are being considered for the factory as part of its plans for the new Phaeton. It said Mueller has "alternative ideas" for production at the factory.
The next-generation Phaeton, which is due to hit showrooms by about 2019-2020, will be offered only as an electric car, VW said on Oct. 13.
VW calls the Dresden plant "Glaeserne Manufaktur" (German for transparent factory). It was opened as a futuristic production showpiece in 2002. The factory has glass walls so customers can watch the final stage of their cars' assembly. The plant is regarded as an architectural gem and has been used as a backdrop for events, ceremonies, concerts and operas.
If the factory shuts, it would be a blow for eastern Germany, whose economy is still stuttering 25 years after the former Communist state reunited with western Germany.
The factory's closure would anger workers representatives, who have half of the 20 seats on VW's supervisory board. A plant closure requires two-thirds support in the board.
VW's labor chief and supervisory board member, Bernd Osterloh, said in a statement: "Dresden is and remains a firm part of the VW family. Even if the new Phaeton concept comes later, that does not mean that we have cause to question Dresden."
The Phaeton cost more than 1 billion euros ($1,1 billion) to develop. It was launched in 2002 as a pet project of former VW Chairman Ferdinand Piech. The car was aimed a challenging sedans from German premium brands BMW and Mercedes-Benz and was praised for its ride and quality but buyers generally shunned an upscale car with a VW badge.
The sedan has sold in low numbers and Dresden's output of Phaetons fell 30 percent in 2014 to just over 4,000 cars, according to VW’s annual report.
Bernstein analyst Max Warburton said the Phaeton was one of the "most loss-making European cars of modern times."