Volkswagen's supervisory board, on September 4, approved a comprehensive restructuring plan proposed by CEO Oliver Blume, which includes an additional 50,000 job cuts on top of the 50,000 already agreed upon, bringing the total potential job reductions to 100,000 by 2030. This decision follows a period of intense negotiation and division within the boardroom, as labor representatives and the state of Lower Saxony, which holds a 20% voting stake, had previously rejected similar proposals aimed at accelerating cost savings. The approved plan also hints at the possible closure of several German factories, with Blume stating that some sites may not remain profitable in the 2030s.
The restructuring is driven by the company's "critical state," facing stiff competition from Chinese rivals, the costly transition to electric vehicles, and higher production expenses in Germany. Despite generating €158.1 billion in revenue in the first half of 2026, Volkswagen's operating profit declined by 11.6% to €5.9 billion, with an operating return on sales of only 3.8%. Blume emphasized the need for deep structural changes, citing the company's oversized and often slow operating model, with a workforce of nearly 630,000. He also noted that VW is currently over-producing approximately 500,000 vehicles in Europe annually.
The approval comes despite significant pushback from the IG Metall union and works council, who expressed concerns over the potential dilution of previous agreements guaranteeing no factory closures or compulsory redundancies until 2030. Christiane Benner, head of IG Metall, described the new cuts as "another slap in the face." Investor reaction has been mixed; while the stock saw a 5.5% increase over the week leading up to the decision, suggesting market confidence in the restructuring, it remains about 29% below its 52-week high of €109.10. The market's willingness to give management credit for a hard line on restructuring contrasts with the mood on the factory floor, where the communication of the cuts has been described as "disastrous."
Blume's "Target Vision 2030" plan aims to cut Volkswagen's model lineup by half and reduce overheads, particularly in Germany, and lower the global production target from 11 million vehicles in 2018 to 9 million annually. While the company's 3.8% operating margin is solid, it is deemed insufficient to fund necessary investments in new technologies and maintain existing sites. The approved plan signals a major shift for the automotive giant as it attempts to regain competitiveness and adapt to a rapidly changing industry landscape.
