Volkswagen plans sweeping cuts of 100,000 jobs and four plant closures

Volkswagen is preparing a major restructuring that would eliminate 100,000 jobs and stop production at four factories in Germany, according to a Financial Times report. The move is part of the German automaker’s effort to cut costs as competition from Chinese rivals intensifies. With about 625,000 employees worldwide, the plan would amount to roughly one in every six workers losing their job, and would be the largest layoff program ever carried out by a German company.

The company also plans to halt output at four German sites, in addition to two plants already closed. The facilities mentioned are Volkswagen sites in Emden, Zwickau and Hamburg, plus an Audi plant in Neckarsulm. Volkswagen had previously disclosed a plan to cut 50,000 jobs in Germany by the end of 2030 and reduce domestic car production by 500,000 units, but the new report says the current proposal would add another 50,000 cuts.

The proposal is likely to face resistance from labor unions, and a new round of talks is expected. At the end of 2024, the company reached an agreement with the union on the planned layoffs in Germany. Volkswagen now says additional action is needed because of the impact of tariffs imposed by the US administration, the war in Iran and the slowdown in China.

The wider European auto sector, and Volkswagen in particular, has been hit by the rise of Chinese manufacturers, which accounted for about 10% of sales in Europe in the first five months of the year, according to the European Automobile Manufacturers’ Association. In the first quarter, Volkswagen reported a 28% drop in profit to 1.56 billion euros and a 2% decline in revenue to 75.7 billion euros. Chief Executive Oliver Blume warned shareholders last week that “the risk has never been so high.” Full details are due at a supervisory board meeting on July 9, and the company is also considering splitting its core Volkswagen brand and its components division into separate standalone units.