BERLIN, June 26 (Parliament Politics Magazine) – Volkswagen is weighing the most significant structural overhaul in its 89-year history as the automaker grapples with intensifying market pressures. Sources familiar with the matter revealed on Friday that the company is considering the elimination of up to 100,000 positions globally and the closure of four major manufacturing facilities in Germany.
The proposed plan, spearheaded by Chief Executive Oliver Blume and Chief Financial Officer Arno Antlitz, aims to aggressively reduce costs. The strategy arrives as the world’s second-largest automaker struggles against slowing global demand and the rapid expansion of Chinese electric vehicle manufacturers.
Proposed Plant Closures and Job Cuts
The restructuring plan includes shutting down production sites in Hanover, Zwickau, and Emden, alongside the Audi factory in Neckarsulm. These closures would directly jeopardize more than 45,000 manufacturing jobs. These potential losses are in addition to a previous plan to cut 50,000 positions by 2030, a target that leadership now deems insufficient given the current economic climate.
Should these plans proceed, the total headcount reduction would represent approximately 15 percent of the Volkswagen Group’s global workforce of 667,164 employees. Management is also reviewing a 15 percent reduction in planned investments, bringing total spending to just over 130 billion euros over the next five years.
Structural Changes and Corporate Spin-offs
Beyond personnel and production cuts, the automaker is evaluating the separation of its core Volkswagen brand and components division into independent legal entities. This move is designed to simplify the corporate structure and potentially allow individual business units to list on public capital markets more easily.
This transition follows a period of significant financial strain. The company experienced a 53.5 percent plunge in 2025 operating profits and a 28.4 percent drop in profits during the first quarter of 2026. Internal challenges have also plagued the group, particularly regarding the development of in-house software, which faced years of delays and necessitated a strategic partnership with Rivian to advance vehicle technology.
Competitive Pressures in the EV Market
The urgency behind this overhaul stems from the declining market share in China, the company’s largest market. Volkswagen was the top-selling automaker in China for years but lost that position to BYD in 2024 and slipped to third place in 2025. According to data from AlixPartners, the market share for non-Chinese automakers in the region fell to 32 percent in 2025, down from 57 percent in 2020.
The Zwickau plant, once viewed as a flagship project for electric vehicle production, serves as a focal point for the current crisis. Originally built with an investment of over 1.2 billion euros to produce 330,000 electric vehicles annually, the facility is now operating at less than half of its capacity due to cratering global demand for EVs.
Institutional Resistance
The proposal faces substantial legal and political hurdles. Volkswagen maintains a job security agreement, known as Beschäftigungssicherung, which has protected workers from forced layoffs since 1994. Breaking this agreement to facilitate widespread job cuts would require a major confrontation with Germany’s powerful IG Metall union and the company’s works council.
The company must also navigate the influence of the state of Lower Saxony, which holds a 20 percent voting stake in the automaker. Under the Volkswagen Act, major strategic decisions require an 80 percent majority, granting local political stakeholders a significant veto.
“The entire group, including its brands and subsidiaries, must undergo far-reaching change,” a Volkswagen spokesperson stated when asked about the confidential plans.
The restructuring proposal is scheduled for formal presentation and debate during a Supervisory Board meeting on July 9.
