Germany wants to support Volkswagen and help it avoid factory closures but the ailing car giant will have to fix most of its problems itself, Economy Minister Robert Habeck said Friday.

Volkswagen said earlier this month it needed significant restructuring to stay competitive, and was considering shutting sites in Germany for the first time in its 87-year history.

The announcement stunned employees and added to concerns about Germany's flagship car industry as it grapples with high costs, increased competition from China and weak demand for electric vehicles (EVs).

"The majority of the tasks will have to be solved by Volkswagen itself," Habeck said during a visit to a VW plant in Emden in northwestern Germany.

He refused to comment on media reports that thousands of jobs could be threatened at Volkswagen, saying he "cannot interfere" in company policy.

But politicians could help the car sector by looking at ways to send the right "market signals", Habeck said, stopping short of mentioning any possible state aid for Volkswagen.

He pointed in particular to efforts to boost demand for EVs, insisting that electric driving "is the future."

Sales of battery cars have plummeted in Germany this year after the government phased out subsidies, dealing a blow to carmakers who have invested heavily in the transition away from fossil fuels.

Berlin recently laid out plans for new tax breaks for electric company cars to help turn the tide, Habeck noted.

The minister will on Monday host a high-level meeting with representatives from the car industry and unions to discuss the sector's woes.

Underlining the current challenges for carmakers, Mercedes-Benz on Thursday lowered its outlook for 2024 on the back of weak sales in the key Chinese market.

German rival BMW likewise trimmed its profit guidance earlier this month, also citing muted demand in China.