Comprehensive austerity plan at Volkswagen: Transformation that could affect 100,000 people on the table

Volkswagen, Europe's largest automaker, is bringing a comprehensive restructuring plan aimed at cutting costs to the agenda of its supervisory board today. The savings program prepared by CEO Oliver Blume will be discussed at the meeting to be held at the headquarters in Wolfsburg.

If the plan is accepted, the company will have initiated one of the largest organizational transformations in its history. According to Reuters, the draft includes job cuts of approximately 100,000 people across the Volkswagen Group.

FACTORY CLOSURES ON THE AGENDA

Options under consideration include the closure of the Hannover, Emden, and Zwickau factories in Germany, as well as Audi's Neckarsulm facility. These options point to a contraction approximately twice the size of previously publicized job reduction plans.

Volkswagen management is under pressure for profitability due to rising production costs, idle capacity in Germany, intensifying competition from Chinese automakers, and customs tariffs imposed by the US on imported cars. It is stated that investors are also expecting tougher cost-cutting measures.

However, the decision-making process is not expected to proceed easily. The supervisory board includes representatives of the Porsche and Piëch families, as well as labor unions and the state government of Lower Saxony. Furthermore, company management had made a commitment in an agreement reached with unions at the end of 2024 that factories in Germany would not be closed.

For this reason, alternative scenarios for facilities operating at low capacity are also on the table. While the search for an investor for the Osnabrück factory continues, producing some models developed for the Chinese market in Germany is also being shown as an option.

According to industry estimates, the capacity utilization rate at Volkswagen's facilities in Germany is expected to fall to 81 percent in 2026 and to 73 percent by the end of the decade. It is projected that this rate could drop to 42 percent by 2030 at the Zwickau factory, where the possibility of closure is being discussed.

Prior to the meeting, IG Metall, Germany's largest industrial union, held protests at approximately 20 Volkswagen facilities across the country. IG Metall President and Deputy Chairman of the Volkswagen Supervisory Board Christiane Benner reacted to the management, arguing that solutions must be found to ensure that German production facilities operate at full capacity.

News Source: 12punto