Volkswagen Board Approves Restructuring Plan Including 50,000 Job Cuts

The supervisory board of German automaker Volkswagen Group approved a massive restructuring plan on the 3rd local time, which includes cutting 50,000 jobs.

This approval comes two months after reports surfaced in July that management was considering cutting up to 100,000 jobs and closing four plants in Germany, which prompted strong backlash from the labor union vowing to "stop it with all our might."

Volkswagen Group announced in a press release that day that "the supervisory board unanimously approved the 'Future Plan 2030' proposed by management."

Reuters evaluated this as the most extensive restructuring in Volkswagen's 89-year history.

Chief Executive Officer (CEO) Oliver Blume said, "This is a strong signal for the future of the Volkswagen Group," adding, "We bear responsibility for our entire workforce, partners, and industrial jobs worldwide."

Volkswagen stated, "The supervisory board acknowledged that the Volkswagen Group's European production capacity currently exceeds demand by more than 500,000 vehicles, and that it is currently impossible to secure future production volumes for the Emden, Zwickau, Hanover, and Neckarsulm plants from 2031 to 2034 in phases. Accordingly, alternative utilization plans for these plants are being reviewed."

Volkswagen decided to formulate plans for a "sustainable and competitive" production structure for its European plants by June of next year.

It added, "To focus on competitive models, about half of the models will be discontinued by 2035."

The company also decided to simplify the production process by reducing the number of customizable specifications and option combinations per vehicle by about 75% over the same period.

Regarding workforce restructuring, it explained, "Additional adjustments are necessary apart from existing programs," and "According to the 'Future Plan 2030' analysis, adjustments to approximately 50,000 jobs are expected to be necessary across the entire group, including management."

This accounts for about 8% of the total workforce as of the end of last year.

This is in addition to the 50,000 job cuts that have been underway since 2024.

Previously, in 2024, Volkswagen labor and management agreed to cut 50,000 jobs by 2030, including 35,000 in core brands, and in exchange, promised not to close plants in Germany until the late 2020s.

However, tensions between labor and management escalated when a review plan to cut 100,000 jobs and close four plants—effectively overturning this agreement—emerged this July.

Nonetheless, the works council, which acts as the union, drew a line by stating that the 50,000 jobs approved this time are not a fixed layoff target, but rather a "planned assumption" reverse-calculated from the financial goal of achieving a 9% operating profit margin by 2030.

The works council stated that compulsory layoffs remain prohibited until the end of 2030 under the existing agreement.

Bloomberg explained that the core background behind the union not opposing this approval was that the union succeeded in accepting the need for additional cost savings while preventing immediate plant closures, weakened union co-determination, and the separation of core businesses.

Christiane Benner, deputy chair of the supervisory board and head of the German metal and electrical industry union IG Metall, and Daniela Cavallo, head of the works council, emphasized in a joint statement, "We have not agreed to plant closures, and plans to separate the passenger car and components businesses were excluded from discussion. We prevented a dangerous escalation."

They added, "The principle that employment stability and economic sustainability are equal goals has been reaffirmed."

In the company's press release, Cavallo stated, "The future plan is necessary to successfully lead our group over the next decade without placing the burden of change solely on employees," and "Through this, Volkswagen once again emphasizes that employment stability and economic sustainability hold equal importance as corporate goals."

Ferdinand Dudenhöffer, a local industry expert, predicted that discussions regarding the future of the four plants would continue over the next 10 months.

He evaluated, "A certain level of stability has been regained, but it is far from 'peace.' In political terms, it is more like a 'ceasefire.'"

Volkswagen has suffered major blows due to intensifying competition with Chinese automakers, U.S. tariffs, and sluggish sales in Europe following the pandemic.

Vehicle sales in the first half of this year decreased by 8.4% compared to the same period last year, and operating profit fell by 11.6%.

Volkswagen presented a goal to achieve annual vehicle sales of 9 million units and a 9% operating profit margin (approx. 31 billion euros) by 2030.

To achieve this, the company decided to invest a total of 135 billion euros (approx. 213 trillion KRW) in capital expenditures (CapEx) and research and development (R&D) from 2027 to 2031.

Following the announcement that day, Volkswagen shares rose 7.9% on the Frankfurt Stock Exchange.

American Depositary Receipts (ADRs) listed on the New York Stock Exchange surged 9.1%, recording their largest gain since March 2023.

(Photo: Getty Images)
※ Please note: This article was translated by AI and may contain errors.