Volkswagen AG is contemplating significant job cuts and plant closures as part of CEO Oliver Blume‘s strategy to enhance the competitiveness of Europe’s largest carmaker, according to Manager Magazin.
The plans presented by Blume at a board meeting earlier this week propose doubling the workforce reduction to 100,000 employees, Manager Magazin reported on Friday, citing sources familiar with the matter. The owner of the Porsche and Audi brands currently employs approximately 657,000 people.
Oliver Blume aims to streamline Volkswagen as the company contends with U.S. tariffs, ongoing weakness in the Chinese market, and increasing competition in Europe from rivals such as BYD Co. and Stellantis NV. His new strategy will be unveiled to the supervisory board next month and is expected to serve as the starting point for negotiations that could extend for months. At VW, restructuring efforts are often moderated by union leaders and government officials, who together hold a blocking majority on the board.
Cost-cutting plans and plant closures
Volkswagen’s optimization initiatives highlight broader challenges facing the German industry. Mercedes-Benz Group AG plans to discuss deeper cost reductions with union representatives, while BMW AG issued a stark profit warning earlier this month, leading to a decline in its shares.
Oliver Blume’s new plan aims to reduce total overhead costs by 11 billion euros (12.5 billion dollars) by the end of this decade, as well as close four German plants in the medium term, the publication reported. These include an Audi plant in Neckarsulm and VW plants in Hanover, Zwickau, and Emden.
He is also considering spinning off component plants and, crucially, the VW brand to enhance the group’s flexibility, the report stated. This brand has long faced challenges with low profitability.
Volkswagen “must undergo profound changes”, a company representative said, declining to comment on the specifics of the Manager Magazin report. The executive board “has been working intensively over the past few months on a future-oriented plan to reorient the company”.
Market and union reaction
Volkswagen shares rose 1.2% in Frankfurt, although they have dropped a quarter since the start of the year. The CEO has already made some strides, including selling a 51% stake in its marine engine unit Everllence to generate funds. Approximately 28,000 employees have agreed to leave VW, which is part of an already announced plan to cut 50,000 jobs across the group by 2030. VW has also reduced its production capacity from 12 million cars per year to a more realistic 9 million.
Union leaders quickly reacted to the new plans, expressing concern. They “worry about our employees and the regions where we operate”, according to a joint statement from the company’s works council and the IG Metall union. “If such plans are implemented, we will resist them with all our might”.
Cutting jobs at Volkswagen poses a significant challenge. Employee representatives hold half the seats on the carmaker’s supervisory board, and the German state of Lower Saxony, which typically supports the unions, holds two additional seats. VW “has suffered from years of neglect in adjusting its workforce due to the stifling influence of the regional government and unions”, said Matthias Schmidt, an independent automotive analyst from Hamburg. Competition from Chinese manufacturers “hits the German giant the hardest”.