Volkswagen approves "historic restructuring": another 50,000 jobs to be laid off, doubling the previous scale, and its model lineup halved in the past decade.

Volkswagen is undertaking the largest structural transformation in its history.

According to the Financial Times, the supervisory board unexpectedly approved a comprehensive restructuring plan proposed by CEO Oliver Blume on Thursday . The plan includes cutting another 50,000 jobs and reducing the model lineup by up to 50% by 2035 to cope with multiple challenges such as high costs, weak demand, and continued pressure from Chinese competitors.

The 50,000 newly added job cuts, combined with the 50,000 job reductions already implemented since 2024, mean that the total number of layoffs across the Volkswagen Group's brands has reached 100,000, consistent with the upper limit proposed by Oliver Blume at the beginning of the year. The new layoffs represent approximately 8% of Volkswagen's total global workforce of about 652,000 at the end of last year, and include management positions.

According to a plan announced on Thursday, Volkswagen will cut about half of its models on sale over the next nine years to reduce product line complexity and lower per-vehicle costs through economies of scale. The supervisory board explicitly acknowledged in its resolution that Volkswagen's "European production capacity currently exceeds demand by more than 500,000 vehicles."

Volkswagen informed investors that the restructuring would be the company's "largest transformation plan in history." The supervisory board convened ahead of its scheduled Friday meeting, and after marathon negotiations with unions and the state of Lower Saxony, officially finalized the plan late Thursday night. The company also announced its goal of increasing the group's operating profit margin from 3.8% in the first half of this year to 9% by 2030.

Performance under pressure, transformation is imminent

Financial data reveals the urgency of restructuring. In the first half of 2026, Volkswagen Group's vehicle sales declined by 8.4% year-on-year, operating profit fell by 11.6%, and the operating profit margin was only 3.8%. Increased competition from Chinese domestic automakers, the impact of US tariffs, and a weak European domestic market together constitute the core pressures currently facing Volkswagen.

The electrification transition also brings a heavy cost burden. Volkswagen needs to maintain its traditional gasoline vehicle business while continuously investing resources in developing electric vehicle platforms. This dual-track approach has significantly increased operating costs and made the strategic logic of streamlining product lines and concentrating resources increasingly clear.

At the factory level, Oliver Blume had previously stated that new models would not be allocated to the four plants in Emden, Zwickau, Hanover, and Neckarsulm unless they could reduce costs. Volkswagen added in a statement on Thursday that "alternative uses for these plants are being evaluated," suggesting that the possibility of factory closures has not been ruled out.

Lower Saxony's Minister-President Olaf Lies stated, "Volkswagen and the German automotive industry face enormous challenges in the face of international competition. That's why it's so important that we embark together on the necessary path of transformation."

The market reacted positively to the unanimous approval by the supervisory board. RBC Capital Markets analyst Tom Narayan called the unanimous approval by the board and unions a "positive surprise," but emphasized that the key is the implementation of the plan. "We believe this decision is an important step for Volkswagen to move closer to Chinese automakers in terms of cost competitiveness, and Chinese automakers are actively expanding in Europe," he said.

Union politics: Split plan temporarily shelved

The negotiations were quite complex. Just 24 hours before the supervisory board approved the resolution, the prospects for negotiations between management, the labor union, and the state of Lower Saxony remained bleak. Lower Saxony is home to Volkswagen's headquarters, many factories, and is also a significant minority shareholder with veto power over major decisions.

Another point of contention in the restructuring plan—spinning the Volkswagen brand and parts business from the group into a separate entity—has faced strong opposition from labor unions in these negotiations. The German metalworkers' union (IG Metall) stated that the spin-off plan "has been shelved," arguing that it would weaken workers' collective decision-making power. IG Metall President Christiane Benner and Volkswagen Workers' Council Chair Daniela Cavallo stated in a joint statement: "No factory has been abandoned."

However, according to a source close to the public, the spin-off plan is still under discussion, and the final form of the restructuring plan remains uncertain.

Risk warning and disclaimerInvesting involves risk; please exercise caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Any investment decisions made based on this information are at your own risk.