By Elsie Kamsiyochi
Volkswagen is weighing one of the most sweeping restructuring plans ever seen in the global automotive industry, with proposals that could eliminate up to 100,000 jobs and shut down four manufacturing plants in Germany as the company battles mounting financial and competitive pressures.
According to people familiar with the discussions, the German automotive giant is considering closing factories in Hanover, Zwickau, Emden, and Audi’s Neckarsulm facility as part of a broad overhaul aimed at restoring profitability and preparing the company for an increasingly competitive global market. The proposals are expected to be discussed by Volkswagen’s supervisory board during a key meeting scheduled for July 9.
If implemented, the plan would place more than 45,000 additional jobs at risk on top of the approximately 50,000 workforce reductions already under consideration, making it the largest restructuring programme in the history of the automotive industry. The scale of the proposed overhaul would surpass many previous cost-cutting efforts by major global carmakers and rival some of the largest industrial restructurings seen over the past several decades.
The proposed measures come as Volkswagen struggles with slowing vehicle demand across Europe, weakening sales in China, and increased costs resulting from tariffs affecting exports to the United States. Together, these challenges have placed enormous pressure on the company, forcing executives to consider more aggressive steps to secure its long-term future.
Chief Executive Oliver Blume has reportedly presented the restructuring strategy to senior management in an effort to build internal support before formal discussions with the company’s supervisory board. The plan is expected to face fierce opposition from labour unions, employee representatives and politicians, particularly because Volkswagen remains one of Germany’s largest employers and a symbol of the country’s manufacturing strength.
Reports also suggest Volkswagen is evaluating a significant reduction in future investments, cutting planned spending by roughly 15% over the next five years. Company executives are also said to be examining broader structural reforms that could include separating the core Volkswagen passenger car business and parts operations into more independent entities in an effort to improve efficiency and sharpen management focus.
A Volkswagen spokesperson declined to comment on reports describing confidential internal documents but acknowledged that major changes would be necessary.
“The entire group, including its brands and subsidiaries, must undergo far-reaching change,” the spokesperson said, without confirming the specific proposals.
The company’s works council and Germany’s influential IG Metall union reacted swiftly, issuing a joint statement pledging to oppose any attempt to close factories or impose large-scale layoffs. Union leaders warned they would use every available means to prevent the plans from moving forward, setting the stage for what could become one of the most difficult labour disputes in Volkswagen’s history.
The political dimension further complicates any restructuring. The state of Lower Saxony, which owns a significant stake in Volkswagen, has considerable influence over company decisions alongside labour representatives, making any major restructuring especially challenging to implement.
Volkswagen employed more than 667,000 people globally during the 2025 financial year, with nearly 43% of its workforce based in Germany. The proposed cuts would therefore represent one of the largest workforce reductions ever undertaken by a European industrial company.
Investors remain cautious about the company’s prospects. Volkswagen shares fell to their lowest level in 16 years following reports of the proposed restructuring, reflecting uncertainty over whether management will be able to overcome political and union resistance while successfully transforming the business.
The company has attempted similar reforms before. In 2024, management proposed closing German plants for the first time in Volkswagen’s history, but strong resistance from labour groups forced executives to scale back many of those plans. Industry analysts believe worsening market conditions have now left the company with fewer alternatives.
Volkswagen’s difficulties are closely linked to the rapid rise of Chinese automakers, which have dramatically expanded both at home and internationally. Domestic manufacturers such as BYD have steadily captured market share through competitive pricing, advanced electric vehicle technology and faster product development cycles.
Once the dominant foreign carmaker in China, Volkswagen lost its leading position to BYD in 2024 and slipped further to third place in 2025 behind Geely. The decline in the world’s largest automotive market has significantly weakened one of Volkswagen’s most important sources of revenue and profitability.
Chinese manufacturers are also expanding rapidly across Europe and other international markets, intensifying competition for established automakers. Industry data shows that brands including BYD, Chery, SAIC and Leapmotor have significantly increased their European market share over the past year, with dozens more Chinese brands preparing to enter the region.
Analysts argue that Volkswagen’s current challenges reflect years of delayed restructuring as the company struggled to balance political interests, labour agreements and the costly transition toward electric vehicles. Many believe the company must now move much faster if it hopes to remain competitive in an industry undergoing its biggest transformation in decades.
The outcome of the July 9 supervisory board meeting is expected to determine whether Volkswagen proceeds with what could become the most extensive restructuring in its 89-year history—a decision that would have far-reaching consequences for employees, investors, suppliers and the broader European automotive sector.
Source Reuters
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