Volkswagen AG (VWAGY), Europe's largest automaker, is considering cutting as many as 50,000 additional jobs worldwide as Chief Executive Oliver Blume pushes forward with a major cost-reduction effort. The possible reductions would come on top of roughly 50,000 positions already included in a savings program launched in 2024. Blume said Volkswagen's overhead remains about 20% higher than that of competitors, suggesting the company may need a substantially smaller workforce to close the cost gap. He also said decades of headcount growth had left staffing at a level that was no longer sustainable under current market conditions.
The restructuring plan comes as Volkswagen faces weaker business conditions and renewed pressure to improve efficiency across its manufacturing network. Proposals reportedly included potentially closing plants in Emden, Hanover, Zwickau and Neckarsulm, although the plan faced opposition from labor representatives and failed to secure initial board approval. Blume indicated that alternatives to factory closures may be available and highlighted an average 20% improvement in production costs at German factories over the past year. However, Volkswagen has not yet been able to confirm competitive future model allocations for those plants, which may leave their longer-term utilization uncertain.
Volkswagen, which employs more than 657,000 people worldwide, is also dealing with declining sales in China, U.S. tariffs affecting its Audi and Porsche luxury brands, weak European demand and underused factories. Stellantis NV NYSE:STLA, BMW AG and Mercedes-Benz Group AG, competing global automakers facing similar industry pressures, have also been affected by several of these challenges. Volkswagen recently raised about 7.4 billion, or $8.5 billion, by selling a 51% stake in ship-engine business Everllence and is now reviewing a portfolio of more than 2,000 stakes and businesses. That review includes assessing whether assets such as motorcycle brand Ducati and its holding in U.S. solid-state battery maker QuantumScape Corp. NASDAQ:QS support Volkswagen's core automotive operations and return objectives, a process investors may view as another important part of the broader turnaround.