Volkswagen Confirms 100,000 Job Cuts by 2030 in the Auto Sector's Biggest Ever Restructure

Volkswagen has approved controversial plans to shed 100,000 jobs as the German carmaker faces fierce competition from Chinese rivals, ending a bitter row with unions over its revival plan. After the latest round of talks, the company announced a further 50,000 job cuts, part of a sweeping cost-cutting plan to reduce a further 50,000 positions by 2030 — bringing the total job losses in the pipeline to 100,000. The reductions amount to about 15% of Volkswagen's employees: the group employs more than 650,000 people across all its brands. The total has been described as the largest restructuring ever carried out in the global automotive industry.

The deal with unions and the fate of four German plants

The agreement came after a meeting of shareholders, unions and state representatives on Volkswagen's supervisory board. It grants a stay of execution to four German plants — Emden, Zwickau, Hanover and the Audi site in Neckarsulm — which had been threatened with closure. In exchange for staff reductions, the company agreed a staggered end to current production at those plants between 2031 and 2034, with no specific plans beyond that date. The supervisory board acknowledged that there is overcapacity in Europe to produce 500,000 vehicles for which there is no market. The number of car models produced across the group — whose brands include Volkswagen, Audi, Bentley, Skoda, Seat, Porsche, Cupra and Lamborghini — will be slashed by half. Volkswagen said: "It is essential to systematically align workforce levels with economic realities."

• A further 50,000 job cuts announced after the latest round of talks, bringing the total in the pipeline to 100,000
• Reductions equal to about 15% of a workforce of more than 650,000 people across all brands
• A staggered end to current production at Emden, Zwickau, Hanover and the Audi site in Neckarsulm between 2031 and 2034
• The number of car models produced by the group to be halved
• Investment of "a three-figure billion sum" planned over the next few years

Management and union reaction

Volkswagen's chief executive, Oliver Blume, said the deal was "a strong signal for the future" and that the company would invest "a three-figure billion sum" in the next few years "to make our iconic brands even more attractive, stronger and more competitive". Blume now has a mandate for what the company previously called the "most strategically profound transformation programme" in VW Group history. The agreement was seen as a considerable test for the chief executive, who had arranged an emergency meeting in case the package was rejected, in preparation for a potential showdown with unions. Last month Blume was booed by staff during a tour of Volkswagen's headquarters in Wolfsburg, northern Germany, during a dialogue about the company's financial challenges; in July, protesters against the proposed job cuts gathered outside the company's Zwickau factory in Saxony. IG Metall, the company's biggest staff union, which has representation on the supervisory board, said concessions had been made on both sides to avert "a dangerous escalation of the conflict". Christiane Benner, first chair of IG Metall, and Daniela Cavallo, chair of the General and Group Works Councils of Volkswagen, said: "Concrete solutions must now be developed for all locations … we expect the board to now do its homework based on the compromise reached and deliver results promptly." Earlier this year, plans to turn the plant in Osnabrück into a defence factory were abandoned after objections from Qatari investors.

Reasons for the restructure, analyst verdicts and the market

Volkswagen had been struggling for years with falling profits and overproduction in Europe even before the current pressure, while its sales in China are decreasing and the company faces hefty US tariffs. Deutsche Bank called the approval a "fundamental breakthrough" and a "much-better-than-feared outcome", adding that the agreement would not solve Volkswagen's challenges overnight and that "execution remains key". The bank said the outcome provided the strongest evidence yet that Volkswagen's challenges may be addressable within its complex governance structure. Citi called the deal a "brave and rational plan" and "a realistic decision for all concerned", noting: "Given VW's German plant competitiveness and lack of global revenue opportunities, VW simply had no other choice." Citi added that the agreement showed the workers council had taken responsibility for ensuring the long-term survivability of VW's core business in Europe. On the Friday after the announcement, Volkswagen shares rose 8% in early trading.

Company details

Volkswagen is a German carmaker employing more than 650,000 people across brands that include Volkswagen, Audi, Bentley, Skoda, Seat, Porsche, Cupra and Lamborghini. Official website: volkswagen.com. Source: The Guardian.