Volkswagen pushes to cut 100,000 jobs in largest restructuring in auto industry history

Volkswagen Group is pushing to cut 100,000 jobs in what would be the largest restructuring in the history of the automotive industry. Labor unions have mounted fierce opposition, however, leaving it unclear whether the plan will proceed as proposed.

According to German weekly Der Spiegel and other local media, Volkswagen Group CEO Oliver Blume recently presented the supervisory board with a restructuring plan to eliminate 100,000 positions — 15 percent of the company's global workforce of 657,000 — and close four additional factories in Germany. German daily Bild reported the actual target could be even higher, at 120,000 jobs.

The supervisory board convened Thursday (local time) to deliberate on the cost-cutting measures Blume put forward.

Volkswagen had already agreed with unions in 2024 to cut 35,000 jobs in Germany and halt production at two factories, later raising that target to 50,000. The latest plan nearly doubles that figure. At 100,000 jobs, it would surpass General Motors' 1991 reduction of 74,000 positions — the previous record for the auto industry.

The factories under consideration for closure are the Zwickau, Emden and Hannover plants, along with Audi's facility in Neckarsulm. Management plans to phase out production at each site by 2034. The four plants together employ about 40,000 workers. Management intends to sell the factory facilities to defense companies and shift vehicle production to lower-cost plants in Eastern Europe.

Management also presented the board with a plan to reduce annual investment from 180 billion euros ($206 billion) to 135 billion euros by 2031. Der Spiegel reported that Volkswagen Group aims to lift its operating profit margin — which fell to 3.3 percent in the first quarter of this year — to 9 percent by 2030.

Even if the restructuring plan clears the supervisory board, it faces a major obstacle in union opposition. While unions agreed to the 35,000-job cut two years ago, they have strongly rejected the far larger reduction now being reported. IG Metall, the metalworkers' union representing Volkswagen employees, held protest rallies at 12 Volkswagen sites that day.

Local media say it will be difficult for the restructuring plan to pass the supervisory board unchanged over union objections. A law commonly known as the "Volkswagen Act," enacted when the company was privatized in 1960, requires approval from at least two-thirds of supervisory board members for major decisions such as relocating or building new factories.

Volkswagen's supervisory board consists of 10 shareholder representatives and 10 worker representatives. With management and labor already evenly matched, the company side is at a further disadvantage because one shareholder seat is currently vacant. The supervisory board's rare history of reaching decisions by vote rather than consensus adds to the view that passage will be difficult.

The state government of Lower Saxony, which holds a 20 percent stake in the company along with veto rights, also opposes the job cuts. To circumvent the Volkswagen Act and push the restructuring through, management is said to be exploring a plan to spin off the core Volkswagen brand as a separate subsidiary.