Volkswagen signals deeper restructuring as unions warn of ‘major conflict’
Volkswagen, the second largest vehicle manufacturer in the world, has unveiled a sweeping restructuring strategy that will cut tens of thousands from its workforce, reduce production capacity and slash model complexity, signalling that measures agreed with unions last year may no longer be sufficient to secure the carmaker’s future.
Union representatives warned management it risked a “major conflict” with employees, arguing that workers should not bear the cost of strategic mistakes made by the company. Reports suggest Volkswagen is considering cutting as many as 100,000 jobs worldwide – more than 15% of its workforce – alongside the possible closure of plants in Hanover, Emden and Zwickau, as well as Audi’s Neckarsulm factory.
Following a meeting of the group’s supervisory board, Europe’s largest carmaker said its strategy to 2030 would halve the number of vehicle models it offers and reduce vehicle variants by up to 75% as it seeks to become leaner and more competitive in an increasingly challenging global market.
Manufacturing
Although Volkswagen stopped short of confirming reports that up to 100,000 jobs could be cut worldwide or that four German plants could close, chief executive Oliver Blume made clear that further restructuring would be needed. The company employs around 657,000 people globally.
“The global situation has deteriorated over the past 12 months,” Blume said, citing geopolitical tensions, tariffs, rising costs, tighter regulation and intensifying competition, particularly in China. He added that Volkswagen needed to “get rid of excess capacity”, while digitalisation, artificial intelligence and shared services would help improve productivity and speed.
Chief financial officer Arno Antlitz said that previously agreed cost reductions were “not sufficient in the current economic and geopolitical environment”.
He added that the group would improve vehicle cost structures, significantly reduce overheads, increase plant efficiency and accelerate technology development and decision-making.
Volkswagen has argued that a more radical overhaul is needed after net profit fell 28% to €1.56bn and revenue declined 2% to €75.7bn in the first quarter of 2026.
Blume said: “The next few years will decide who will play a decisive role in the automotive industry in the future.”
The announcement prompted an immediate backlash from unions. As the supervisory board met at the company’s Wolfsburg headquarters, IG Metall organised coordinated protests at around 20 Volkswagen, Audi, Porsche, MAN and Cariad (the company’s software creator) sites across Germany.
The agreement reached with IG Metall in late 2024 ruled out compulsory redundancies and plant closures in Germany while providing for more than 35,000 job reductions by 2030 through voluntary departures, early retirement and other measures. The supervisory board did not specifically set out plans to introduce compulsory redundancies but the strategy outlined, said the unions, made it clear that far more stringent cuts were on the way.
Earlier this year, Volkswagen also confirmed that around 20,000 employees had already agreed to leave the business voluntarily by the end of the decade, indicating that the original restructuring programme was progressing as planned.
However, the latest strategy suggests management now believes those measures will not be enough to restore competitiveness, setting the stage for renewed negotiations with unions over the future shape of the business.
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