BERLIN (Reuters) – Volkswagen said on Wednesday it was considering closing the Brussels plant of its luxury brand Audi, amid falling demand for electric vehicles (EVs), as Europe’s largest carmaker cut its annual margin target late on Tuesday.

Audi said in a statement on Wednesday that it intends to restructure the Brussels plant, which produced around 50,000 cars last year.

After a period of heavy investment in EVs, automakers have been hit hard by an unexpected drop in demand.

Volkswagen’s Brussels plant, which employs around 3,000 people, also faces “long-standing structural challenges”, including the difficulty of changing its layout due to its proximity to the city and high logistics costs.

A consultation process that could go as far as the cessation of activities “if no alternative solution is found” has been launched, specifies the Audi press release.

“The employee representatives of Audi AG are demanding a future perspective for the plant and our colleagues in Brussels. Audi management must take responsibility for the site,” said Rita Beck, spokeswoman for the Audi committee within the European works council of the Volkswagen Group.

Separately, Volkswagen on Tuesday cut its operating profit forecast to 6.5 percent from 7 to 7.5 percent previously. Porsche SE, which owns just under a third of Volkswagen AG but most of the voting rights, responded by also lowering its profit forecast.

Volkswagen reported a 20% drop in first-quarter sales, partly due to delivery delays caused by the closure of Audi’s Brussels plant for two weeks in February following a shortage of components.

(Reporting by Victoria Waldersee and Christina Amann; by Pauline Foret, edited by Augustin Turpin)

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