Volkswagen CEO Oliver Blume is seeking approval for a sweeping restructuring plan that could eliminate as many as 100,000 jobs from its global workforce of around 630,000, representing approximately 16% of its employees. The proposals also include the potential closure of four German factories: Hanover, Emden, Zwickau, and Audi's Neckarsulm site. This aggressive overhaul is driven by intense competition from Chinese rivals like BYD Co., high German production costs, and dwindling profit margins which have been halved between 2021 and 2025. Volkswagen shares have lost more than half their value in the last three years, with its market valuation shrinking to a decade-low of 38.6 billion euros ($44.1 billion).
The company is under pressure from factors including rising US import tariffs, expected to cost Volkswagen 5 billion euros ($5.7 billion) annually, and a significant loss of market share in China, where its vehicle deliveries have hit their lowest levels since 2011. Blume has emphasized the critical nature of the situation, stating that the company must change or risk collapse. Union representatives and political stakeholders, particularly from Lower Saxony which holds a significant stake, are expected to resist these deeper cuts, potentially leading to prolonged negotiations.
While Volkswagen had previously agreed with unions in 2024 to cut 50,000 jobs in Germany by 2030, with a pledge to avoid plant closures until the end of the decade, the current proposals represent a significant escalation. The plan also considers concentrating on the most attractive market segments and reducing production capacity from 10 million to 9 million vehicles per year. The company's unique governance structure, involving strong labor representation and the state of Lower Saxony, often complicates decision-making and resistance to such drastic measures is expected to be fierce, with worker protests already occurring.
