Volkswagen CEO Oliver Blume. (Kriztian Bocci/Bloomberg)
key takeaways:
- Volkswagen CEO Oliver Blume has reportedly proposed doubling job cuts to 100,000 and closing four German factories.
- The cuts aim to reduce overhead by 11 billion euros by 2030 amid tariffs, China weakness and increasing competition.
- Blume plans to present the strategy to Volkswagen’s supervisory board next month, with labor leaders already promising a protest.
Volkswagen AG is looking to cut thousands of additional jobs and close factories under pressure from CEO Oliver Blume to make Europe’s biggest automaker more competitive, Manager magazine reported.
Plans presented by the CEO during a management board meeting earlier this week include doubling staff cuts to 100,000, Manager magazine reported on June 26, citing people familiar with the matter. The owners of Porsche and Audi currently employ around 657,000 people.
Blume is trying to slow down Volkswagen as it grapples with U.S. tariffs, continued weakness in China and increasing competition from rivals including BYD Co and Stellantis NV in Europe. Their new strategy will be presented to the supervisory board next month and will likely signal a starting position in months of tense negotiations.
At VW, restructuring is often blocked by labor leaders and state politicians, who together have a blocking majority in the body.
Volkswagen’s streamlined efforts underscore the German industry’s broader struggles. Mercedes-Benz Group AG plans to discuss deeper cost cuts with labor representatives, while BMW AG issued a massive profit warning earlier this month that sent its shares tumbling.
The magazine said Bloom’s new efforts include cutting general overhead costs by 11 billion euros ($12.5 billion) by the end of the decade and closing four German factories in the medium term. These include an Audi site in Neckarsulm as well as VW plants in Hanover, Zwickau and Emden.
It is also considering spinning off component plants and, crucially, the renamed VW brand, to weaken the group, the report said. The nameplate has been struggling with low profitability for a long time.
Volkswagen “must undergo a deep transformation,” a company spokesman said, declining to comment on the specifics of the Manager Magazine report. The executive board “has been working intensively over the past few months on a forward-looking plan to reorganize the company.”
Volkswagen shares rose as much as 1.2% in Frankfurt. Even this year the stock is down by a quarter.
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The CEO has already made some progress, including selling a 51% stake in its Everlens marine-engine unit to raise cash. About 28,000 employees have agreed to leave VW, part of an already reported effort to reduce 50,000 employees across the group by 2030. VW has reduced its production capacity from 12 million vehicles per year to a more realistic 9 million.
Labor leaders were quick to oppose the new plans. According to a joint statement from the company’s works council and the IG Metall union, they “destabilize our workforce and the areas where we work.” “If such plans are put forward we will oppose them with all our might.”
Job cuts at Volkswagen are difficult to foresee. Labor representatives hold half the seats on the carmaker’s supervisory board, and the German state of Lower Saxony – which favors unions – holds the other two seats.
“VW has suffered years of neglect in readjusting workforce numbers due to the holdout of the regional government and trade unions,” said Matthias Schmidt, an independent auto analyst based near Hamburg. Competition from Chinese manufacturers “is hitting the German giant the hardest.”
