Volkswagen AG’s (OTC:VWAGY) CEO Oliver Blume warned employees on Monday that the automaker may need to eliminate another 50,000 jobs worldwide as it tries to close a 20% cost gap with rivals and avoid shutting German factories.
Volkswagen Weighs Another 50,000 Job Cuts
As per a Reuters report, Volkswagen has already agreed to roughly 50,000 reductions across the group, including at Audi and Porsche. Adding Blume’s "theoretical deduction" would bring potential cuts to about 100,000 positions.
"We are currently assessing across all brands, companies and regions how many adjustments are actually necessary and feasible," Blume wrote in a memo reviewed by Reuters.
Blume Favors Alternatives To Plant Closures
Blume said Volkswagen preferred "intelligent solutions" to plant closures. However, he said the company still could not identify competitive long-term uses for facilities in Emden, Hanover, Zwickau and Neckarsulm. Management has considered repurposing underused factories for defense production or assembling Chinese-brand vehicles in Europe.
Labor representatives blocked Blume’s broader restructuring proposal in a 12-7 vote on the supervisory board last week. Volkswagen’s governance structure gives worker representatives and the state of Lower Saxony decisive influence over strategic decisions.
Tariffs And China Deepen Financial Pressure
The warning follows a sharp business downturn. Volkswagen’s second-quarter global deliveries fell 8.6%, the steepest decline in four years, while deliveries in China plunged 36.6% amid growing pressure from domestic electric-vehicle competitors.
Volkswagen plans to reduce annual production capacity from 10 million to 9 million vehicles and cut its model lineup by up to half.
Tariffs have also intensified the pressure. Blume said in May that trade duties were costing Volkswagen about 5 billion euros, or $5.9 billion, in annual operating profit. Its 2025 operating profit more than halved to 8.9 billion euros or $10.14 billion.
Volkswagen has pursued technology fixes through its Rivian Automotive Inc. (NASDAQ:RIVN) software venture, expanded XPeng Inc. (NYSE:XPEV) alliance and efforts to overcome software weaknesses in China.
Blume said management would hold more meetings to find "the best solutions."
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