Volkswagen Approves Restructuring Plan With 50,000 More Job Cuts

Volkswagen won board approval for a restructuring plan that includes cutting about 50,000 additional jobs worldwide and simplifying its vehicle lineup, as Europe’s biggest automaker seeks to improve profitability.

The workforce reductions reflect intensifying global competition, the company said Thursday, adding that changing customer demand and technological shifts across the automotive industry also played a role.

Volkswagen also acknowledged that its European factories currently have capacity to build more than 500,000 vehicles beyond expected demand.

As a result, the company said it cannot currently guarantee future production allocations between 2031 and 2034 for its plants in Emden, Zwickau, Hanover, and Neckarsulm.

It said alternative uses for those sites are being evaluated while a broader plan for a competitive European production network is developed by the end of June 2027.

Outside Europe, Volkswagen said it will concentrate on its most profitable market segments in North America while adapting to slower growth expectations in China and expanding exports to countries in the Global South.

The overhaul comes as the automotive industry faces rapid technological change and increasingly fierce global competition, particularly from Chinese automakers.

In its first-half results, published on July 24, Volkswagen said its operating margin had fallen to 3.8 percent and warned that growing competition from China, both in its domestic market and through rising exports to Europe, meant it needed to accelerate cost cuts, simplify its business, and improve efficiency.

“What matters now is swift and consistent implementation,” said Volkswagen Group CFO Arno Antlitz.

CEO Oliver Blume called the board’s decision “a strong signal for the future of the Volkswagen Group.”

“We are taking responsibility for our entire workforce, for our partners and for industrial jobs worldwide,” Blume said. “Over the coming years, we will invest a three-figure billion sum to make our iconic brands even more attractive, stronger and more competitive.”

Germany’s IG Metall union and Volkswagen’s works council said on Thursday they had helped avert a major confrontation over the restructuring by reaching a compromise with management.

They said they had secured the abandonment of plans to spin off Volkswagen’s core passenger-car brand and components business and prevented immediate plant closures.

While acknowledging the challenges facing the company, the union said they would not accept workers bearing the costs of the overhaul alone.

Reshaping the Business

Volkswagen shares rose 5.9 percent by 10:46 a.m. GMT on Friday, making them the second-biggest gainer on the pan-European STOXX 600 index after earlier reaching their highest level since June 18.

The company said it intends to cut its model portfolio by about half by 2035 while reducing the number of vehicle variants by around 75 percent. By focusing on fewer models, Volkswagen expects to lower costs and increase production volumes for each vehicle.

Volkswagen also plans to simplify its management structure and introduce a new bonus system for executives.

The company said it will review its businesses, investments, and property portfolio, keeping assets that support its core automotive business and selling or restructuring those that do not.

The announcement comes shortly after Volkswagen named senior sales executive Marco Schubert to head its North American business, replacing Kjell Gruner as part of a management reshuffle.

The company said the appointment reflects its focus on North America, which Blume at the time called Volkswagen’s most important growth market.

Reuters contributed to this report.