Volkswagen weighs sweeping German plant closures and job cuts
A works council note says existing reductions are insufficient, with four German factories and as many as 100,000 job losses under review amid China pressure and weak demand.
- Volkswagen management is considering shutting down four German factories and increasing total job cuts to as many as 100,000, which would be the largest overhaul in the auto industry's history.
- The specific German plants under discussion for closure are Hanover, Zwickau, Emden, and Audi’s Neckarsulm facility, putting more than 45,000 jobs at risk.
- The potential cuts are a response to mounting pressure from Chinese competitors, US import tariffs, and weakening European demand, which the company says makes its business model unsustainable.
- The proposal faces strong opposition from unions and the state of Lower Saxony, Volkswagen's second-largest shareholder, who have vowed to resist the measures.
Volkswagen management has told employee representatives that the job cuts already agreed are not enough, according to a works council note seen by Reuters on Monday (June 29).
The note said any further reductions had not yet been quantified, at least not to the employee side.
The warning adds to proposals under consideration at Europe’s largest carmaker, where two people familiar with the matter said on Friday (June 26) that Volkswagen could shut four German factories and raise total job cuts to as many as 100,000, in what would be the sector’s biggest-ever overhaul.
The sites under discussion are Hanover, Zwickau, Emden and Audi’s Neckarsulm plant, the people said.
Closing them would put more than 45,000 jobs at risk, on top of the 50,000 cuts already planned.
Volkswagen supervisory board members have been informed of the plans, which are due to be discussed at a July 9 meeting.
In absolute terms, laying off up to 100,000 people and axing four assembly plants would mark the largest restructuring in automotive industry history.
It would be comparable with General Motors’ major shake-ups before and during its 2009 bankruptcy, and in the early 1990s, when GM cut as many as 74,000 jobs over four years and shut or idled 21 plants.
Volkswagen is under mounting pressure from Chinese rivals, tariffs on car imports into the United States and weakening demand in Europe, challenges the company has said make its business model unsustainable.
Chief executive Oliver Blume presented the proposals to senior executives earlier this week as he sought support for deep cuts that are expected to face fierce resistance from unions and Lower Saxony, Volkswagen’s second-largest shareholder.
Manager Magazin first reported the overhaul and said Volkswagen, the world’s second-largest carmaker, would cut investment by about 15% to just over €130 billion (US$148 billion) over the next five years.
The magazine also said Blume and chief financial officer Arno Antlitz aim to fundamentally restructure the 89-year-old group, including by spinning off the core VW brand and parts operations into separate entities.
“The high costs are merely a symptom, not the cause. They do not address the root cause, which is weak sales,” said Ingo Speich of Deka.
“VW must bring attractive products to market that are in high demand; that would put an end to the debate over costs.”
A Volkswagen spokesperson declined to comment on “confidential documents”.
“The entire group, including its brands and subsidiaries, must undergo far-reaching change,” the spokesperson said.
Volkswagen’s works council and IG Metall, Germany’s powerful metalworkers’ union, vowed to resist any such measures.
“Should such plans go ahead, we would do everything in our power to prevent them,” they said in a joint statement on Friday.
The premier of Lower Saxony also said the state would not agree to the plan.
Porsche SE, the investment vehicle of the Porsche and Piëch families and Volkswagen’s biggest shareholder, declined to comment.
The proposals are likely to put renewed focus on Volkswagen’s unusual governance and ownership structure, which gives significant influence to labour representatives and Lower Saxony.
In its 2025 financial year, Volkswagen had a global workforce of 667,164, with almost 43% employed in Germany.
Blume’s first attempt to close plants in Germany in 2024 met fierce resistance from labour unions and forced a retreat.
At the time, management had considered shutting or selling several sites as part of a broad cost-cutting drive to tackle overcapacity and weak electric-vehicle demand.
The move triggered strikes and a prolonged stand-off with IG Metall and the works council, both of which hold significant sway over company decisions.
As market conditions have worsened, Blume is under even greater pressure to revive Volkswagen’s fortunes while it battles tariffs and growing competition from Chinese automakers.
“The VW Group has suffered from years of neglect in readjusting workforce numbers due to the stranglehold the regional government and trade unions have on the company,” independent auto analyst Matthias Schmidt said.
“The market reality is hitting the German giant hardest.”
Major automakers have steadily lost ground to locally produced electric vehicles in China.
According to AlixPartners, non-Chinese automakers’ market share fell to 32% in 2025 from 57% in 2020.
Volkswagen, long China’s top automaker, was pushed into second place by BYD in 2024 and fell to third place in 2025.
That decline has also spread to premium automakers such as BMW, which issued a shock profit warning last week, partly because of weak sales in China.
Chinese automakers are also expanding into emerging markets and growing quickly in Europe.
BYD, Chery, SAIC and Leapmotor doubled their combined European market share through May from a year earlier, according to ACEA, while dozens more Chinese automakers have launched or plan to launch in Europe soon.
Reuters
