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Labour chiefs say compromise on restructuring prevented ‘dangerous escalation’
The measures approved on Thursday at a meeting in Wolfsburg double workforce reductions across Volkswagen Group brands since late 2024. Photograph: EPAVolkswagen’s supervisory board backed a sweeping restructuring that calls for 50,000 additional job cuts, far fewer models and a smaller industrial footprint, giving chief executive Oliver Blume his clearest mandate yet to overhaul Europe’s biggest carmaker.
The measures approved on Thursday at a meeting in Wolfsburg double workforce reductions across Volkswagen Group brands since late 2024, while also paving the way for the company to slim its vehicle line-up by as much as half by 2035. Management is pursuing the reductions in response to declining sales in China, high costs in Germany and underused factories.
VW is also tightening investment, planning €135 billion of capital expenditure and research and development spending from 2027 through to 2031, about 16 per cent less than the investment round agreed on last year. The spending reductions come as Chinese rivals led by BYD expand in Europe, adding to pressure to cut costs and direct investment toward its strongest businesses.
“This is a brave plan and a realistic decision for all concerned,” analysts at Citigroup wrote in a note, calling the agreement “existential” for the carmaker. It “should further allow VW to continue to move capital to its highest-return brands and models, without the need to maintain excess capacity utilisation,” they added. VW’s US depositary receipts jumped about 9 per cent in New York on Thursday, the most since March 2023.
VW’s works council, which represents the company’s employees, sought to temper the potential for job losses, saying the 50,000 figure is a planning assumption derived from Volkswagen’s target to achieve a 9 per cent margin by 2030 rather than a fixed headcount goal. A spokesman for the labour group also said that compulsory lay-offs remain ruled out through the end of 2030 under existing agreements.
That distinction reflects the broader compromise behind Thursday’s unanimous board vote, reached a day earlier than expected after weeks of increasingly bitter rhetoric. Labour representatives had accepted that Volkswagen needed further cost reductions. But they fiercely opposed plant closures, moves to weaken co-determination – Germany’s system of worker representation in corporate decisions – and plans to separate parts of the core VW business.
In the final package, dubbed “Future Plan 2030,” Blume won backing for the extra job cuts and broad efficiency measures. The overhaul targets an operating margin of 9 per cent by 2030 on annual sales of about 9 million vehicles. Workers secured assurances that no factory would be immediately abandoned and that contentious site decisions would be worked through over the coming months. The deal stops short of closing factories right away.
VW acknowledged that it currently has about 500,000 vehicles’ worth of excess annual capacity in Europe. The company said its factories in Emden, Hannover, Neckarsulm and Zwickau currently lack competitive future production plans once existing models phase out between 2031 and 2034. Alternative uses for the plants will now be explored. That gave labour-friendly board members room to support the overhaul without abandoning core red lines.
IG Metall union chief Christiane Benner and works council head Daniela Cavallo said the compromise had “prevented a dangerous escalation,” while stressing that no plant closing had been agreed upon and that plans to separate the VW passenger-car and components businesses were off the table.
“The work is only just beginning,” the labour chiefs said of the restructuring plan. “What we will continue never to accept, however, is the burden being placed one-sidedly on employees. ” The Porsche-Piëch family, which controls a majority of VW’s voting rights through Porsche SE, has pushed for faster action as returns and dividend flows come under pressure.
Blume has argued that Volkswagen can no longer afford to carry the same sprawling cost base and industrial footprint while funding investments in electric vehicles, batteries and software. Porsche SE “welcomes this decision and intends to continue to support the transformation efforts of the board of management of its core investment, Volkswagen AG,” a spokesperson said in a statement.
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