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Volkswagen said it will launch a sweeping overhaul that will see the German carmaker slash up to 50,000 jobs and could lead to plant closures following lengthy talks between management, unions and the state of Lower Saxony.
The group told investors on Thursday evening that the restructuring would be “the most far-reaching transformation programme” in its history.
The announcement comes after chief executive Oliver Blume earlier this year outlined a plan that could result in the reduction of up to 100,000 jobs and the closure of as many as four plants.
One of Germany’s biggest industrial employers, VW, has been hit hard by the rising competition from Chinese carmakers, US tariffs and lacklustre car sales in its European home market since the pandemic.
VW’s supervisory board approved the plan late on Thursday after months of talks with unions and Lower Saxony — the state where the group is headquartered and the home to many of its factories. Lower Saxony is also a large minority shareholder in VW and can block important decisions.
The carmaker said that its supervisory board “acknowledged” that the group had “excess production capacity of 500,000 vehicles in Europe” and that plants in Emden, Zwickau, Hanover and Neckarsulm have “no competitive follow-on production” within the next five to eight years.
“In parallel, alternative uses for these plants are being explored,” the company said in a statement.
VW added on Thursday that a “further fundamental reduction of global staffing levels” was “essential”, adding that the plan “envisages a group-wide reduction of around 50,000 jobs — including management positions”.
It was not immediately clear if that number comes on top of the 50,000 jobs already agreed in an earlier deal with unions in 2024. VW could not immediately be reached for comment.
The company said it is seeking to lift its operating margin to 9 per cent by 2030, up from just 3.8 per cent in the first half of this year. It will axe one in two models over the coming nine years in an attempt to reduce complexity and lower unit costs of the remaining models owing to higher economies of scale.
