Volkswagen Board Approves Sweeping Restructuring, 50,000 Job Cuts

Volkswagen's supervisory board has unanimously approved a major restructuring plan, including the elimination of approximately 50,000 jobs and the potential closure of four German plants after 2031 if alternative production is not found. The affected plants are located in Emden, Hanover, Neckarsulm, and Zwickau. This move, combined with previously agreed-upon layoffs, brings the total projected job losses within the group to around 100,000.

The decision follows months of tension between Volkswagen's management and labor unions. The company operates under a co-determination system where employee representatives hold half of the supervisory board seats. The state of Lower Saxony, a significant shareholder, typically acts to moderate management's demands. Reports suggest CEO Oliver Blume was prepared to bypass the board and appeal directly to shareholders if the plan failed.

Workers had organized protests and voiced opposition to management's recent stance, with the IG Metall union criticizing the company's rhetoric. The restructuring is a response to a sharp decline in the company's financial performance, attributed to rising energy and labor costs in Germany, U.S. tariffs on European cars, and intense competition from Chinese manufacturers, particularly in the electric vehicle sector. Volkswagen's profit fell 11% in the first half of the year, sales in China dropped 32%, and net profit for the previous year plummeted 53% to 8.9 billion euros.

In a joint statement, the union and works council emphasized that the agreement averted a major conflict and protected the co-determination system. They noted that no final decision has been made on plant closures, with further negotiations planned for each site to preserve jobs. The decision does not affect the Osnabrück plant, slated for closure in 2027 as part of an earlier reduction phase. A separate decision regarding the transfer of the Osnabrück plant to the Lower Saxony government for a joint venture with Israel's Rafael Advanced Defense Systems is pending.

Furthermore, internal documents reportedly indicate Volkswagen intends to phase out production of its Spanish brand SEAT entirely by 2029, with its market niche to be taken over by the Cupra brand.