The German automotive industry is facing an unprecedented challenge. Volkswagen AG, a pillar of the German economy, is considering a radical restructuring plan that could lead to the elimination of up to 100,000 jobs worldwide. The document, prepared by CEO Oliver Blume, proposes not only a massive workforce optimization but also the suspension of production at key plants in Germany.

Double blow to strategy

The new plan effectively doubles the parameters of the previously announced program. While management previously planned to cut 50,000 positions by 2030 (of which 28,000 have already been agreed upon), Blume's current strategy, alongside CFO Arno Antlitz, aims for a reduction twice as large. This decision comes against the backdrop of the group's total workforce of approximately 657,000 employees.

The financial aspect of the reforms is also changing: planned investments for the next five years will be reduced by approximately 15% — to a level of slightly more than €130 billion. Group management links the necessity of such drastic measures to a complex of external factors that have become critical for the business.

Economic crisis and loss of markets

Analysts highlight three key reasons forcing VW to change its survival strategy:

  • Crash in the Chinese market. The share of foreign automakers in China has dropped from 57% to 32%. Local manufacturers, in particular BYD, have successfully reclaimed positions from Europeans.
  • Tariff wars. The introduction of additional duties by the US costs the group approximately €4 billion annually, dealing a blow to export profitability.
  • Structural decline. The slowdown in global electric vehicle sales has coincided with a critical rise in internal costs in Germany, related to energy prices and labor costs.

As part of the restructuring, the legal separation of the core Volkswagen brand and the automotive components division is being considered. The goal is to create independent structures for a future initial public offering (IPO) and the attraction of new capital.

Factories under threat of closure

The most painful aspect of the plan is the threat of production stoppages at four key sites in Germany. In the medium term, lines whose lifecycle is expiring are under threat:

  • Hannover: Commercial vehicle production.
  • Zwickau: Electric vehicle assembly plant.
  • Emden: Passenger car production lines.
  • Neckarsulm (Audi): Plant of the subsidiary Audi brand.

Legal shield and union resistance

The implementation of the program faces serious legal barriers. Germany has strict institutions of social partnership. The group's works council and the industry union IG Metall have already expressed categorical protest, warning of their readiness to use all legal methods of defense, including strikes.

A key factor restraining management is the structure of the Supervisory Board. A blocking majority is held by representatives of the workforce and the state government of Lower Saxony (the group's second-largest shareholder). This makes it impossible to unilaterally approve the layoff plan without reaching a compromise.

According to the corporate charter and German labor law, any decisions to close production capacities require the approval of the Supervisory Board. Furthermore, there are specific legal guarantees: protection against forced layoffs at the Hannover, Zwickau, and Emden plants is in effect until the end of 2030, and at the Audi plant in Neckarsulm — until the end of 2033. Thus, VW management faces a complex task: to transform the business without violating social contracts and without provoking large-scale social conflicts.