‘Existential Threat’: Volkswagen’s Drastic Cost-Cutting Plan Could Shed 100,000 Jobs and Shut Four German Factories

Volkswagen’s top executives have internally described the company’s financial condition as “existential”, paving the way for a restructuring that could eliminate up to 100,000 positions worldwide and put several German facilities on the chopping block.

CEO Oliver Blume intends to double the original savings target. Under the new transformation blueprint, the carmaker aims to reduce costs by roughly 20 percent by 2028 — a far more aggressive goal than earlier projections.

Four German Sites in the Crosshairs

According to media reports, the plants in Hannover, Zwickau and Emden, along with the Audi facility in Neckarsulm, are candidates for closure. Additionally, Volkswagen plans to structurally separate its core brand Volkswagen and the components division from the rest of the group.

The supervisory board is scheduled to meet on 9 July to discuss these far-reaching measures. The decisions are expected to set the course for the company’s future.

Union and Political Backlash

The proposals have triggered fierce opposition. IG Metall and the works council have vowed to fight the plans, accusing management of resorting to irresponsible threats.

The state of Lower Saxony, which holds more than 20 percent of Volkswagen’s voting rights, has rejected any plant closures. The federal government in Berlin has also signalled its intent to block such moves if possible.

On the stock market, Volkswagen’s preference shares dropped nearly 4 percent to €74.30 in reaction to the news.

Divesting Non?Core Assets

Alongside the restructuring, VW is pushing ahead with the sale of peripheral businesses. On 25 June, the group sold a 51 percent majority stake in its large?engine subsidiary Everllence to Bain Capital for €7.4 billion.

Volkswagen retains a 49 percent share. For five German Everllence sites, employment is guaranteed until 2030, and operational?dismissals are barred during that period.

A Broader Industry Crisis

The drastic measures stem from a sharp deterioration in business conditions. Since 2022, the profits of German carmakers, including VW, BMW and Mercedes, have more than halved.

China, a critical market, has become a particular worry. The market share of German manufacturers there has fallen to 16 percent.

The German Association of the Automotive Industry (VDA) projects that up to 225,000 jobs could be lost across the sector by 2035. Audi CEO Gernot Döllner has warned that unless the transformation succeeds, the entire German automotive industry could be at risk of collapse.

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