Historic decision from Volkswagen: Preparing to lay off 100,000 people worldwide
German automotive giant Volkswagen plans to lay off approximately 100,000 employees worldwide due to rising costs, pressure from Chinese competitors, and falling profit margins.
12punto
German car giant Volkswagen (VW) Group CEO Oliver Blume has announced plans to lay off approximately 100,000 employees worldwide. The doubling of this figure, previously announced as 50,000, reveals the scale of the crisis the company is going through.
VW, which houses major brands such as Porsche, Audi, Seat, and Skoda, is experiencing difficult times due to contraction in key markets and increasing competition.
In a message sent to company personnel by CEO Oliver Blume, it was emphasized that Volkswagen's costs are 20 percent higher than those of its competitors. Stating that they have entered a comprehensive evaluation process across all brands and regions, Blume said, "We must be more efficient, more robust, and simpler. We must reduce our costs."
THE IMPACT OF CHINA AND THE US ON PROFIT MARGINS
The company's profit margin has seen a serious erosion in recent years. Volkswagen, which reported an operating profit of 22.6 billion Euros in 2023, saw this figure drop to 19.1 billion Euros in 2024 and down to 8.9 billion Euros last year.
Among the main reasons for this sharp decline is the loss of blood in China, one of the company's most important markets. Sales in the Chinese market decreased by 26 percent in the first half of the year. In the US market, a 7 percent drop in sales was recorded due to the impact of customs duties imposed on car imports by the Trump administration.
In addition, Chinese car manufacturers, which have made an aggressive entry into global markets with low production costs and new-generation technologies, are increasingly putting pressure on European brands.
TENSION WITH UNIONS AND THREAT OF STRIKE
The growth of the layoff plans has led to serious unrest within the company. Facing threats of mass strikes in late 2024, management had reached an agreement with the German union IG Metall on a total employment reduction of 50,000 people by 2030.
However, the fact that the new plans on the table increase this number to 100,000 has caused protests to flare up again at facilities across the country. Some industry analysts claim that the 100,000 figure is being put forward as a tactic in negotiations with unions and that the final number may be lower.
On the other hand, Volkswagen had planned to make a factory investment in Turkey in past years, but abandoned this decision due to the conditions of the coronavirus pandemic in 2020.