FRANKFURT, Germany -- Germany's Volkswagen says auto industry headwinds mean it can't rule out plant closings in its home country - and is dropping a longstanding job protection pledge in force since 1994 that would have barred layoffs through 2029.

“The European automotive industry is in a very challenging and serious situation," Oliver Blume, Volkswagen Group CEO, stated in a press release on Monday.

He pointed to new competitors entering the European markets, Germany's weakening position as a manufacturing hub, and the need to “act decisively.”

Thomas Schaefer, the head of the Volkswagen Passenger Cars division, said that efforts to cut costs were “yielding results” but acknowledged that the “headwinds have become significantly stronger.”

European automakers are facing intensified competition from affordable Chinese electric vehicles. The company's half-year financial results indicate that it won't achieve its goal of 10 billion euros in cost savings by 2026, the company stated.

The discussions about potential job cuts and workforce reductions primarily concern Volkswagen's core brand. The core brand's operating earnings dropped to 966 million euros ($1.1 billion) in the recent period, a decline from 1.64 billion euros in the same period last year.

The group also encompasses premium brands Audi and Porsche, which boast higher profit margins compared to the mass-market vehicles produced by Volkswagen, along with SEAT and Skoda.

The company has strived to reduce expenses through early retirements and buyouts, avoiding involuntary layoffs, but now acknowledges that these measures may not be sufficient. Volkswagen employs approximately 120,000 individuals in Germany.

A factory closure would be the first since its US facility in Westmoreland, Pennsylvania, shut down in 1988, according to the dpa news agency.

Union officials and worker representatives condemned the notion of closures or layoffs. Management's approach is “not only shortsighted, but dangerous, as it risks undermining the core of Volkswagen,” Thorsten Groeger, chief negotiator with VW for the IG Metall industrial union, stated on the union's website.

Top employee representative Daniela Cavallo remarked that “management has failed... The consequence is an assault on our employees, our locations and our labor agreements. There will be no plant closings with us.”

The governor of Germany's Lower Saxony region, Stephan Weil, who holds a seat on the company's board of directors, acknowledged the company's need to take action but urged Volkswagen to prevent plant closures by exploring alternative cost-reduction strategies: “The state government will closely monitor this,” he stated in a statement reported by the dpa news agency.