Volkswagen plans 100k job cuts, factory closures to boost competitiveness

Volkswagen’s CEO, Oliver Blume, is reportedly planning drastic measures to boost competitiveness, including potentially cutting up to 100,000 jobs and closing four German factories.

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Volkswagen AG is looking to cut tens of thousands of additional jobs and may shutter factories in a push by chief executive officer Oliver Blume to make Europe’s biggest automaker more competitive, Manager Magazin reported.

The plans, presented by the CEO during a management board meeting earlier this week, include doubling staff reductions to as many as 100,000, the report said, citing sources. The Porsche and Audi owner currently employs around 657,000 people.

Blume has been trying to slim down Volkswagen as it grapples with US tariffs, persistent weakness in China and mounting competition in Europe from rivals including BYD and Stellantis NV. His new strategy will be presented to the supervisory board next month, and likely marks the opening position in what could be months of tense negotiations.

At VW, restructuring often gets watered down by labour leaders and state politicians that together have a blocking majority in the body.

Volkswagen’s streamlining efforts underscore the German industry’s broader struggles. Mercedes-Benz Group AG plans to discuss deeper cost cuts with labor representatives, while BMW AG earlier this month issued a drastic profit warning that sent its shares tumbling.

Blume’s renewed push involves cutting general overhead costs by $12.5 billion by the end of this decade, as well as closing four German factories in the medium term, the magazine said. They include an Audi site in Neckarsulm as well as VW plants in Hanover, Zwickau and Emden.

He’s also considering separating components plants and, crucially, the namesake VW brand to make the group leaner, the report said. The nameplate has long struggled with low profitability.

Volkswagen “must undergo profound change,” said a company spokesperson, declining to comment on the specifics of the Manager Magazin report. The executive board “has been working intensively over the past few months on a future-oriented plan to realign the company.”

Volkswagen shares rose as much as 1.2 per cent in Frankfurt. The stock is still down a quarter this year.

Premier calls for joint strategy

The premier of Germany’s state of Lower Saxony said on Friday the state would not agree to any development that relies on plant closures as a supposedly simple solution and called for a joint German strategy to protect Europe’s car industry from Chinese competition.

Olaf Lies also said co-determination was a key part of Volkswagen’s success, not a competitive disadvantage.

The CEO has already made some progress, including by selling a 51 per cent stake in its Everllence marine-engine unit to raise cash. Some 28,000 workers have agreed to leave VW, part of an already communicated push to reduce 50,000 workers across the group by 2030. VW has also whittled down its production capacity from 12 million vehicles a year toward a more realistic 9 million.

Pushing through job cuts at Volkswagen is difficult. Worker representatives occupy half the seats on the carmaker’s supervisory board, and the German state of Lower Saxony—which tends to side with unions—has another two seats.