Volkswagen chief executive Oliver Blume has confirmed plans to cut up to 100,000 jobs globally. The figure is twice what the carmaker previously stated. Profits are collapsing. Chinese competitors are pressing into Europe. The German group’s supervisory board has rejected Blume’s proposal to shut four factories at home, even as he warns that costs must come down.
The group, whose brands include Porsche, Audi, Seat, Skoda, and the VW nameplate, had already committed to eliminating 50,000 positions in Germany by 2030 through voluntary redundancy packages and partial retirement arrangements. That earlier agreement came in late 2024 after threats of mass strikes, with 35,000 jobs to go at the VW brand and another 15,000 at other brands. Blume told staff the company has already shed 37,000 jobs through those schemes. A second phase of reductions is now necessary, he said, because the group’s overheads run 20% above those of comparable companies.
Since roughly half of overhead costs stem from personnel, Blume wrote in a widely reported memo to staff, a theoretical calculation assuming no change in labour costs would mean eliminating approximately 50,000 additional positions worldwide. “We are currently assessing across all brands, companies and regions how many adjustments are actually necessary and feasible,” he said. The company needs to become more efficient and simpler, and must reduce its costs, he told employees. He described the restructuring as revolving around “12 initiatives, approximately 150 pages and 45 individual resolutions,” and said he perceived broad support on the supervisory board for his analysis despite controversial decisions on the table.
The profit figures tell the story plainly. VW posted an operating profit of €22.6bn in 2023. That fell to €19.1bn in 2024. Last year it dropped to €8.9bn. Sales in China, once among VW’s most lucrative markets, dropped 26% in the first six months of the year compared with the same period last year. In the US, sales fell more than 7%, partly because of tariffs on car imports introduced by the Trump administration.
Pressure from China and tariffs
Chinese brands have been pushing aggressively into international markets, introducing new technologies while benefiting from lower production costs than European rivals. This has compressed profit margins across the industry and added pressure on established manufacturers to control their own costs. Blume told staff that Germany cannot ignore a car market flooded with unneeded vehicles from both China and Europe. The wider automotive industry in Germany has warned of potential job collapse if overproduction is not addressed.
The group intends to cut production from a pre-pandemic level of 12m cars a year to 9m. VW has already reduced output by 2m over the past two years. Another 500,000 units will be trimmed from production in China, where the carmaker faces severe pressure from local competitors. Blume said the company must also cut half of its model lineup, especially the variants spread across different brands, and continue reducing overheads by 20% at its factories.
Board blocks factory closures
The supervisory board, which includes labour representatives alongside company managers, rejected Blume’s plan to shut four German factories. The plants in question are three Volkswagen sites in Emden, Hanover, and Zwickau, plus the Audi facility in Neckarsulm. Zwickau and Emden build electric cars. All four are considered expensive to run. Blume said the company had been unable to confirm alternative uses for them, and production at the sites is scheduled to end between 2031 and 2034.
Blume told staff that smart solutions are always better than closing a plant. The company is exploring alternative options to secure jobs, including advanced discussions about converting its Osnabrück factory from automotive to defence production. A separate plan to build vehicles for the Israeli defence company Rafael, intended to protect jobs at Osnabrück, was blocked by Qatar’s sovereign wealth fund, which holds a 10% stake in VW.
Last week saw widespread protests at Volkswagen, Audi, and Porsche sites across Germany ahead of a supervisory board meeting at which the board spent hours hearing Blume’s previously leaked proposals. IG Metall, the main staff union, had no comment on Blume’s latest remarks but had criticised the plans last Thursday. Christiane Benner, the union’s chair, said the proposals were unacceptable given that the union had already made concessions. “Instead of taking this achievement as a model, the board is confronting employees with new downsizing plans,” she said. “Understandably, the resulting anger and uncertainty are immense.”
Some industry analysts suggested to Agence France Presse that Volkswagen had deliberately publicised the 100,000 figure as a negotiating tactic, and that the final number of cuts is likely to be lower. Blume, who joined Audi at 28 and rose to lead Porsche before taking the top job at the group in 2022, told staff he could fully understand how deeply the situation affects people within the company. He has spent his entire professional life with the group, he said. He was doing everything in his power to keep Volkswagen competitive enough to survive, and promised constructive discussions with staff.