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VW Targets Cutting 100,000 Jobs and Shuttering Plants
Volkswagen's Works Council and Union IG Metall Say They Would Oppose the Reported Plans Forcefully
Key Takeaways:
- Volkswagen CEO Oliver Blume reportedly proposed doubling job cuts to as many as 100,000 and closing four German factories.
- The cuts aim to lower overhead by 11 billion euros by 2030 amid tariffs, China weakness and rising competition.
- Blume plans to present the strategy to Volkswagen’s supervisory board next month, with labor leaders already pledging opposition.
Volkswagen AG is looking to cut tens of thousands of additional jobs and may shutter factories in a push by CEO Oliver Blume to make Europe’s biggest automaker more competitive, Manager Magazin reported.
The plans, presented by the CEO during a management board meeting earlier this week, include doubling staff reductions to as many as 100,000, Manager Magazin reported June 26, citing people familiar with the matter. The Porsche and Audi owner currently employs around 657,000 people.
Blume has been trying to slim down Volkswagen as it grapples with U.S. tariffs, persistent weakness in China and mounting competition in Europe from rivals including BYD Co. and Stellantis NV. His new strategy will be presented to the supervisory board next month and likely marks the opening position in what could be months of tense negotiations.
At VW, restructuring often gets watered down by labor leaders and state politicians that together have a blocking majority in the body.
Volkswagen’s streamlining efforts underscore the German industry’s broader struggles. Mercedes-Benz Group AG plans to discuss deeper cost cuts with labor representatives, while BMW AG earlier this month issued a drastic profit warning that sent its shares tumbling.
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Blume’s renewed push involves cutting general overhead costs by 11 billion euros ($12.5 billion) by the end of this decade and closing four German factories in the medium term, the magazine said. They include an Audi site in Neckarsulm as well as VW plants in Hanover, Zwickau and Emden.
He’s also considering separating components plants and, crucially, the namesake VW brand to make the group leaner, the report said. The nameplate has long struggled with low profitability.
Volkswagen “must undergo profound change,” said a company spokesperson, 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 realign the company.”
Volkswagen shares rose as much as 1.2% in Frankfurt. The stock is still down a quarter this year.
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The CEO has already made some progress, including by selling a 51% stake in its Everllence marine-engine unit to raise cash. Some 28,000 workers have agreed to leave VW, part of an already communicated push to reduce 50,000 workers across the group by 2030. VW has also whittled down its production capacity from 12 million vehicles a year toward a more realistic 9 million.
Labor leaders were swift to push back against the new plans. They “unsettle our workforce and the regions where we operate,” according to a joint statement from the company’s works council and the IG Metall union. “Should such plans be pursued, we would oppose them with all our might.”
Pushing through job cuts at Volkswagen is difficult. Worker representatives occupy half the seats on the carmaker’s supervisory board, and the German state of Lower Saxony — which tends to side with unions — has another two seats.
VW “has suffered from years of neglect in readjusting workforce numbers due to the stranglehold of the regional government and trade unions,” said Matthias Schmidt, an independent auto analyst based near Hamburg. Competition from Chinese manufacturers “is hitting the German giant hardest.”
