Volkswagen Plans Global Job Cuts Up to 100,000 Amid Restructuring

German automotive giant Volkswagen Group is preparing for one of the most extensive restructuring operations in its history, driven by a sharp decline in profitability, intense competition in the Chinese market, and high production costs. Under the leadership of CEO Oliver Blume, the management plans to halve the company's global model lineup, reduce production capacity, and potentially eliminate up to 100,000 jobs worldwide. These measures are seen as a response to the structural challenges facing the automotive sector.

The company's supervisory board recently rejected some proposals, particularly those involving the closure of four German factories and deeper job cuts, due to resistance from labor representatives. However, according to Bloomberg and Reuters, Blume informed employees that an additional 50,000 job reductions might be necessary, on top of the 50,000 already agreed upon, effectively keeping a target of up to 100,000 job cuts on the table. Volkswagen's operating profit more than halved in 2025, and its operating margin fell to 2.8 percent.

At the core of this situation is a significant drop in performance in China, which for many years was Volkswagen's most profitable market. The company lost its leading position in the Chinese market to BYD in 2024 and subsequently fell behind Geely in 2025, dropping to third place. Deliveries in China plunged by 36.6 percent in the second quarter of 2026, negatively impacting Volkswagen's global sales. Furthermore, U.S. tariffs on brands like Audi and Porsche, along with high labor, energy, and regulatory costs in Germany, are also significant factors pressuring profitability.

These restructuring plans have led to volatility in Volkswagen's shares. The company's stock value has reportedly fallen by approximately 60 percent since CEO Blume took office. The European automotive sector is experiencing similar issues; Chinese electric vehicle manufacturers are entering the European market with more affordable and technology-driven models, creating pressure on traditional European manufacturers. Tens of thousands of jobs have already been lost in the German automotive industry, and the implementation of these new plans is expected to have a broader impact on the employment market.

The global economic slowdown, geopolitical tensions, and the costs associated with the transition to electric vehicles have led Volkswagen to state that its “business model that has supported us for decades is no longer sustainable.” The company aims to reduce its annual production capacity from a pre-pandemic level of 12 million vehicles to 9 million. However, opposition from labor representatives on the supervisory board and the government of Lower Saxony makes the full implementation of the plans challenging.

Analysts and market expectations suggest that Volkswagen may adopt a gradual approach to achieve its cost-reduction targets. While the company aims for an operating margin of 8 to 10 percent by 2030, achieving this goal appears difficult under current conditions. Negotiations with labor unions are expected to continue through the second half of the year. Volkswagen's strategy of simplifying its product portfolio and focusing on the most attractive market segments will be critical for the company to regain its competitiveness.