Volkswagen weighs new job cuts as cost pressure grows

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VW weighs deeper cuts

Highlights

VW may cut up to 50,000 more jobs.
Overhead is about 20% above competitors.
Four German plants remain under pressure.
VW is reviewing more than 2,000 assets.

Blume said Volkswagen’s overhead is roughly one-fifth higher than competitors, implying a “theoretical deduction” of about 50,000 roles on top of a similar number already targeted under a savings program launched in 2024, Bloomberg reported. VW employs more than 657,000 people worldwide.

Cost gap puts jobs and plants in focus

Blume told employees that group headcount had grown for decades to a level that was no longer viable. He cited market changes and external pressures that he said were weighing on Volkswagen by double-digit billions of euros.

The comments follow weeks of internal tension. A broader restructuring plan, including a possible doubling of the original 50,000 job reductions and potential closures of four German plants, has faced resistance from labor representatives and failed to secure initial board support.

Sites in Emden, Hanover, Zwickau, and Neckarsulm have been cited as at risk. Blume said there were “smarter options” than factory closures to address high costs and weaker demand, pointing to an average 20% improvement in German factory costs over the past year. Still, he said Volkswagen could not currently confirm competitive model allocations for the plants.

China, tariffs, and weak demand add pressure

Volkswagen is facing problems shared by rivals such as Stellantis, BMW, and Mercedes-Benz. Demand has weakened in China, where consumers remain under pressure from a prolonged real estate downturn. U.S. tariffs are also hurting profit at Audi and Porsche, two of the group’s higher-margin brands.

The company is also dealing with underused factories and a sluggish European market. Blume said last month that Volkswagen’s long-standing model of developing and exporting cars from Germany was no longer viable in its current form.

Portfolio changes are part of the wider overhaul. Volkswagen recently sold a 51% stake in its ship engine unit Everllence, raising about €7.4 billion, or $8.5 billion. Blume said the company’s portfolio of more than 2,000 stakes and businesses would be reviewed for strategic fit and returns.

A deeper test for German manufacturing

The warning matters because Volkswagen is not just cutting costs after a weak quarter. It is questioning the structure that made it one of Germany’s industrial pillars.

With more than 657,000 employees, high fixed costs, and pressure in China, Europe, and the U.S., VW’s restructuring could shape the next phase of Germany’s auto industry. The challenge for Blume is to lower costs without triggering a deeper conflict with unions or weakening future production capacity.

As we previously reported, Volkswagen is to cut its model lineup and capacity as pressure mounts.

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