German automaker Volkswagen would close its assembly plant in Dresden, the first time the company has ended production at a German plant in its 88-year history. The decision was due to severe cash flow pressures and declining performance in the main markets.

The automaker faced a difficult environment as sales slipped in China and Europe, while US tariffs further strained revenue. High domestic costs and a slow transition to electric models have also weakened the company’s position against competitors.

Thomas Schäfer, chief executive of the Volkswagen brand, described the shutdown as an economic necessity, marking a major turning point for the German industrial giant as it struggles to cut costs.