German automaker Volkswagen started talks with a labor union on Wednesday after it said earlier this month that it may have to close domestic plants.

Many Volkswagen workers are members of the union.

The company says cost cuts are necessary because of a drop in demand in the European market and tough competition from Chinese electric vehicle makers.

The closures would be the first in its home country since its foundation in 1937.

The company has scrapped labor agreements guaranteeing employment of more than 120,000 workers at six of its plants in Germany.

The union strongly opposes the possible closures and job cuts.

More than 3,000 people gathered in front of the negotiation venue. A representative criticized management, saying Volkswagen belongs to not only shareholders, but also employees.

Seeking workers' understanding, a negotiator from the firm told reporters that the maker is in a serious situation.

Difficult negotiations are expected, with the union warning of strike action. The talks may have an impact on the German economy.