Volkswagen CEO Oliver Blume is spearheading a major restructuring effort to enhance the automaker's competitiveness, which could involve eliminating as many as 100,000 jobs and shutting down four German factories. This ambitious plan is set to be reviewed by the supervisory board at the company's Wolfsburg headquarters. The move comes as previous cost-saving measures from 2024 are deemed insufficient to compete with the rising influence of export-focused Chinese manufacturers, who are increasingly penetrating the European market.
The context for these drastic cost cuts includes a decline in the Chinese market, which is Volkswagen's largest, and a subdued consumer environment in Europe. Furthermore, the company is grappling with substantial regulatory burdens. Chinese carmakers have been steadily gaining market share in Europe, exceeding 10% for the first time, with a notable shift towards offering more hybrid models that avoid additional tariffs imposed on fully electric vehicles.
Blume has emphasized that Volkswagen's traditional business model, centered on developing and building cars in Europe for worldwide export, is no longer sustainable. While the EU introduced tariffs on fully electric cars in 2024, Chinese manufacturers have adapted by increasing their offerings of hybrid vehicles. The European Union is also considering policy proposals, such as the Industrial Accelerator Act, which could require more vehicles to be manufactured within Europe.
