William Wilkes
Volkswagen’s supervisory board backed a sweeping overhaul that calls for 50,000 additional job cuts, far fewer models and a smaller industrial footprint, giving chief executive officer Oliver Blume his clearest mandate yet to remake Europe’s biggest carmaker.
The plan doubles workforce reductions agreed to across Volkswagen Group brands since late 2024, while also paving the way for the company to slim its vehicle line-up by as much as 50 per cent by 2035. The 50,000 new cuts represent about 8 per cent of VW’s global workforce as of the end of last year.
“Given intensifying global competition, shifting demand and technological change in the automotive industry, a consistent alignment of workforce capacity with economic reality is essential,” the company said in a statement. The board approved the comprehensive restructuring effort, known as the Future Plan, at a meeting in Wolfsburg, Germany.
VW’s works council, which represents the company’s employees, sought to temper the potential for job losses, saying the 50,000 figure is a planning assumption derived from Volkswagen’s target to achieve a 9 per cent margin by 2030 rather than a fixed headcount goal. A spokesman for the labour group also said that compulsory layoffs at Volkswagen remain ruled out through the end of 2030 under existing agreements.
That distinction reflects the broader compromise behind the unanimous board vote, reached a day earlier than initially expected after weeks of increasingly bitter rhetoric. Labour representatives had accepted that Volkswagen needed further cost reductions. But they fiercely opposed plant closures, moves to weaken co-determination – Germany’s system of worker representation in corporate decisions – and plans to separate parts of the core VW business.
VW’s US depositary receipts jumped about 9 per cent in New York on Thursday, the most since March 2023.
In the final package, Blume won backing for the extra job cuts and sweeping efficiency measures. Workers secured assurances that no factory would be immediately abandoned and that contentious site decisions would instead be worked through over the coming months. The agreement gives the CEO stronger backing to push ahead as VW struggles with high costs, weak demand and intensifying competition, particularly from Chinese carmakers.
The deal stops short of immediately closing factories. VW acknowledged that it currently has about 500,000 vehicles-worth of excess annual capacity in Europe. The company said its factories in Emden, Hannover, Neckarsulm and Zwickau currently lack competitive future production plans once existing models phase out between 2031 and 2034. Alternative uses for the plants will now be explored, Volkswagen said.
That gave labour-friendly board members room to support the overhaul without abandoning core red lines. IG Metall chief Christiane Benner and works council head Daniela Cavallo said the compromise had “prevented a dangerous escalation”, while stressing that no plant closing had been agreed upon and that plans to separate the VW passenger-car and components businesses were off the table.
“The work is only just beginning,” the labour chiefs said of the restructuring plan. “What we will continue never to accept, however, is the burden being placed one-sidedly on employees.” Benner said the carmaker was dealing with a “crisis situation”.
The Porsche-Piëch family, which controls a majority of VW’s voting rights through Porsche SE, has pushed for faster action as returns and dividend flows come under pressure. Blume has argued that Volkswagen can no longer afford to carry the same sprawling cost base and industrial footprint while funding investments in electric vehicles, batteries and software.
Porsche SE “welcomes this decision and intends to continue to support the transformation efforts of the board of management of its core investment, Volkswagen AG,” a spokesperson for Porsche SE said in a statement.
The overhaul targets an operating margin of 9 per cent by 2030 on annual sales of about 9 million vehicles. VW is also planning €135 billion of capital expenditure and research and development spending over 2027 through 2031, the company said.
Bloomberg
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