The German automaker has stated that it must significantly enhance its competitiveness.
Volkswagen did not disclose specific numbers of job cuts.
Key Points
Facing fierce competition from Chinese automakers, Volkswagen AG is planning a sweeping reform to improve its financial health. It is expected to cut thousands of additional jobs beyond the previously agreed-upon workforce reduction plan negotiated with its labor union.
Confronted with increasingly intense market competition from Chinese car companies, the automotive giant is advancing a new round of deep restructuring. The plan involves cutting several thousand more positions on top of the 50,000 job reductions previously agreed upon with the union, aiming to bolster the company's financial standing.
On Friday, the company stated that this restructuring project aims to "enhance operational efficiency across the entire company and achieve leaner management." The management is expected to present the detailed contents of this reform plan to the supervisory board early next month.
Previously, the German financial magazine Manager Magazin reported that Volkswagen plans to double its job cut target to 100,000. In addition to closing four plants in Germany, positions in North America and China would also be streamlined.
The group currently has a global workforce of approximately 657,000 employees. Volkswagen has not officially announced the specific number of job cuts nor disclosed which business units this streamlining will affect.
As the world's second-largest automaker, Volkswagen is currently facing significant operational challenges in multiple regions globally: Chinese domestic automakers are continuously squeezing Volkswagen's profitability within China and are now aggressively entering Volkswagen's core home market in Europe.
In its Friday statement, Volkswagen said: "Additional tariffs, cut-throat competition, and stagnating or even shrinking markets in many regions are costing the company tens of billions of euros annually. The entire group must significantly enhance its competitiveness across the board."
Impacted by the negative news, Volkswagen's stock price fell 4% on Friday, hitting its lowest level since 2010, dropping below the lows seen during the COVID-19 pandemic and the 2015 "dieselgate" scandal.
The new round of cost-saving measures will significantly exceed the scope of the agreement Volkswagen previously reached with its powerful labor union. That prior agreement stipulated a reduction of 50,000 jobs in Germany by the end of this decade.
Senior union officials issued a statement, saying that if the company insists on implementing the restructuring plan exposed by the media, the union will do everything in its power to resist it.
Volkswagen CEO Oliver Blume initiated a large-scale restructuring of the group's core business in September 2024. After months of negotiations, Volkswagen and the union reached an agreement: to cut 35,000 positions through voluntary departures by 2030, with a commitment not to close any factories.
Subsequent negotiations were completed with Audi, Porsche, and the software subsidiary Cariad, ultimately expanding the total agreed-upon job reductions across the group to approximately 50,000. Volkswagen revealed last week that slightly more than half of the targeted positions have had employees sign voluntary departure intent agreements.
Now, Blume plans to implement a broader and more forceful deep reform. Although Friday's official statement did not disclose details, management has already clarified the overall reform objectives.
Volkswagen sold 8.98 million vehicles globally last year. At last week's annual general meeting, Blume told investors that the group's global total production capacity needs to be readjusted to 9 million vehicles. Even after implementing all the cost-saving measures from the 2024 union agreement, vehicle production capacity in Europe still needs to be reduced by approximately 500,000 units.
In a research note on Friday, Stuart Pearson, an analyst at Exane BNP Paribas, mentioned: "Whether the media-reported new plant closure plans can overcome union resistance and be implemented smoothly remains to be seen over time."
Volkswagen stated that this new management reform plan also aims to "continuously unlock the potential for technological synergies." For a long time, there has been internal competition in automotive technology development between the headquarters operations in Wolfsburg and its subsidiaries Audi and Porsche.
Blume's team is also reviewing and screening the group's 1,500 subsidiaries to identify non-core assets that could be divested and sold.
On Wednesday, Volkswagen announced it had reached a deal to sell a partial stake in its heavy-duty engine business, Everllence, to Bain Capital for $8.4 billion.
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