Surprise VW Board Deal Clears Way for Sweeping Cuts and Plant Uncertainty

Volkswagen’s supervisory board appeared headed for a historic escalation, then unexpectedly reached agreement on a savings plan that could reshape the company. Chief Executive Oliver Blume can now pursue what he calls the Volkswagen Group’s most far-reaching transformation program.

The agreement adds 50,000 job cuts to the 50,000 positions already scheduled for elimination by 2030, including 15,000 at Audi and Porsche. Olaf Lies, Lower Saxony’s premier and a member of Volkswagen’s supervisory board, said about half of the new reductions, roughly 25,000 jobs, could fall in Germany. The company employed almost 663,000 people worldwide at the end of 2025, including about 284,000 in Germany.

Volkswagen cited growing global competition, changing demand and technological shifts in the auto industry as reasons to align staffing with economic conditions. Blume has said that half of the adjustment need lies in Germany, although the locations of the cuts have not been determined.

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The strategically most profound transformation program in the history of the Volkswagen Group.

Four plants are now facing particular uncertainty: Volkswagen sites in Emden, Zwickau and Hannover, and Audi’s plant in Neckarsulm. The board said it could not currently guarantee competitive successor production at those facilities from 2031 to 2034. The group says Europe has excess production capacity of 500,000 vehicles. Alternative uses are being examined, including temporary defense production and the manufacture of Chinese Volkswagen models in Germany. A plan for the European plants is due by the end of June 2027.

The restructuring aims to lift Volkswagen’s return on sales from 3.8% at the half-year point to 9% by 2030. Production would fall to 9 million vehicles annually, about 1 million below current levels and 3 million below the pre-pandemic figure. The core Volkswagen passenger-car brand will remain within the group, after reports of a possible separation alarmed the works council and IG Metall.

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In view of increasing global competitive pressure, changing demand structures and technological change in the automotive industry, a consistent adjustment of staffing capacity to economic reality is indispensable.