Drop comes as carmaker faces battle with unions over plan to shut three factories in Germany

Volkswagen has reported a 60% drop in profits amid a slump in sales in China, with the carmaker emphasising the difficulties it faces as it prepares to close factories in Germany for the first time.

Germany’s biggest carmaker has told workers that it is considering shutting three plants serving its main Volkswagen brand in its home market and cutting staff pay, raising the prospect of an extended battle with unions representing 120,000 German employees.