Why this car firm plans to slash 100,000 jobs and shut four plants
Volkswagen is preparing one of the biggest restructuring plans in its history, with reports saying the company could cut up to 100,000 jobs worldwide. The German carmaker also plans to stop production at four factories in Germany as it faces growing competition from Chinese vehicle manufacturers.
If approved, the move would eliminate nearly one in every six jobs across Volkswagen’s global workforce of about 625,000 employees. The planned cuts would rank among the largest job reduction programmes ever announced in the automotive industry.
The company had already planned to cut 50,000 jobs in Germany by the end of 2030. According to reports, Volkswagen is now considering reducing another 50,000 positions as part of a wider restructuring effort.
Volkswagen is also looking to reduce vehicle production capacity in Germany by 500,000 units. The company believes these measures are necessary to improve efficiency and lower operating costs.
The latest proposal could lead to production ending at four more plants located in Emden, Zwickau, Hanover and Audi’s factory in Neckarsulm. Earlier, Volkswagen had already closed its Dresden production site and has been searching for a buyer for its Osnabrück factory.
Chief Executive Oliver Blume has been reshaping the company to focus more on its main automotive business. Following the sale of its marine engines unit Everllence for €7.4bn, Volkswagen is expected to consider selling more assets to strengthen its finances.
The company says several challenges have increased pressure on its business. These include rising competition from Chinese carmakers, US tariffs, conflict in the Middle East and slowing market conditions in China.
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Chinese manufacturers accounted for nearly one in every 10 new vehicles sold in Europe during the first five months of the year. This growing competition has added pressure on European car companies to reduce costs and improve efficiency.
Volkswagen had earlier targeted annual savings of €6bn by 2030 through its restructuring programme. The company said reducing costs remains its biggest priority.
The proposed restructuring plan will be presented to Volkswagen’s supervisory board on July 9. The company has declined to comment before the board reviews the proposals.
Workers’ representatives have strongly criticised the reported plan. Union leaders warned they would oppose any measures that threaten jobs and accused the company’s management of reacting without a clear long-term strategy.
Volkswagen is trying to protect its future as competition becomes tougher around the world. However, large-scale job cuts and factory closures could lead to strong resistance from workers and labour unions before any final decision is made.
