Volkswagen Plans Job Cuts, Factory Closures To Boost Competitiveness

Volkswagen AG is reportedly considering a significant restructuring plan that could include cutting tens of thousands of additional jobs and shutting down multiple factories as part of CEO Oliver Blume’s effort to strengthen the competitiveness of Europe’s largest automaker.

According to a Bloomberg report, Blume presented proposals during a recent management board meeting that include doubling workforce reductions to as many as 100,000 employees.

The company currently employs around 657,000 people across its global operations, including major brands such as Porsche and Audi.

The restructuring plan is expected to be discussed by Volkswagen’s supervisory board next month.

However, any major decision may face resistance, as labour representatives hold half of the seats on the board, giving them significant influence over strategic decisions.

The report further suggests that Blume’s strategy involves reducing overhead costs by €11 billion (approximately $12.5 billion) by the end of the decade.

It also includes potential closure of four factories in Germany, including Audi’s Neckarsulm facility and Volkswagen plants in Hanover, Zwickau and Emden.

In addition, the CEO is reportedly considering separating component manufacturing units and possibly even restructuring the core Volkswagen brand itself in an effort to streamline operations and improve profitability, as the flagship brand has struggled with weak margins.

A company spokesperson acknowledged that Volkswagen is undergoing a major transformation, stating that the executive board is working on a long-term plan to realign the company for future competitiveness, though specific details of the report were not confirmed.

The restructuring comes as Volkswagen faces multiple global challenges, including trade tariffs in the United States, slowing demand in China and rising competition in Europe from companies such as BYD and Stellantis.

The company has already taken steps to improve efficiency, including the sale of a majority stake in its Everllence marine-engine unit and voluntary workforce reductions.

Around 28,000 employees have agreed to leave as part of a previously announced plan to cut 50,000 jobs by 2030. Volkswagen has also reduced production capacity from 12 million vehicles annually to around 9 million units.

However, the proposed deeper cuts have triggered strong opposition from labour unions.

The works council and IG Metall union issued a joint statement warning that such measures would create uncertainty for employees and regional economies, and pledged strong resistance if implemented.

Given Germany’s co-determination system, where labour representatives and the state of Lower Saxony hold significant influence on the supervisory board, implementing aggressive restructuring at Volkswagen is expected to face substantial hurdles.