Volkswagen shares jumped 5.9% to hit a two-month high, topping Germany's DAX index after the supervisory board of Europe's largest automaker struck a turnaround agreement that averted an escalation with unions and shareholder Lower Saxony. The positive market reaction provided significant support to the broader European automotive sector, with the European autos index gaining 1.1% on Friday. Despite Friday's gain, Volkswagen's shares are down 22% so far this year as the company faces pressure from U.S. import tariffs, a stagnant European market, and aggressive Chinese rivals that have all hurt its margins and hammered the stock. The pan-European STOXX 600 ticked up 0.1% to finish at 649.88 points on Friday, capping a volatile week with an overall decline of 0.8%.
Volkswagen AG's supervisory board has approved a comprehensive overhaul plan that includes 50,000 additional job cuts by 2030, representing about 15% of VW's global workforce as of the end of last year. The board unanimously approved the comprehensive restructuring effort, known as the Future Plan 2030, at a meeting in Wolfsburg, Germany on September 3, giving CEO Oliver Blume his clearest mandate yet to remake Europe's biggest carmaker. The plan doubles workforce reductions agreed to across Volkswagen Group brands since late 2024, while also paving the way for the company to slim its vehicle lineup by as much as 50% by 2035. As reported by Reuters, the decision comes after weeks of tense negotiations that pitted the board and majority owner Porsche SE against unions and Lower Saxony, with the idea of a spinoff of Volkswagen's passenger car and components businesses no longer being mentioned. The company stated that "given intensifying global competition, shifting demand and technological change in the automotive industry, a consistent alignment of workforce capacity with economic reality is essential."
The approved plan will end auto production at four German plants - Emden, Zwickau, Hanover and Neckarsulm - as Volkswagen faces excess production capacity of 500,000 vehicles in Europe. Volkswagen said that currently it plans to phase out production over 2031-34 at these facilities, though it held out the possibility of finding other uses for the plants. The board statement confirmed there would be an "adjustment of the employee numbers of around 50,000 positions," including management jobs, as part of the comprehensive restructuring. The plan also calls for "leaner leadership structures and shorter lines of decision" to streamline operations and reduce bureaucracy across the organization. Uncertain Future Four German plants face an uncertain future beyond 2030, with management and unions unable to guarantee their continuation under the plan. Any closure would be unprecedented for Volkswagen, which has never shut a full-scale factory on home soil. As one long-term employee in Zwickau told AFP news agency, "If this plant really were shut down, you could put a big black spot on the map. The plant and the jobs outside it, our suppliers, they're the motor of the entire region."
The overhaul targets an operating margin of 9% by 2030 on annual sales of about 9 million vehicles. VW is also planning €135 billion of capital expenditure and research and development spending over 2027 through 2031. The company reported a 30% drop in after-tax earnings for the first half of the year as sales took a hit in China, highlighting the urgency of the restructuring measures. The plan foresees reducing the number of models by around 50%, with CEO Blume stating that "this is a strong signal for the future of Volkswagen Group" and would "make our iconic brands even more attractive, stronger and competitive." The overhaul also targets a 75% cut to product complexity by 2035 as part of the comprehensive transformation strategy. Among the moves is a structural change that should bring about faster decision-making and a cut to the number of businesses and holdings it owns by about one-third.
VW's works council sought to temper the potential for job losses, stating that the 50,000 figure is a planning assumption derived from Volkswagen's target to achieve a 9% margin by 2030 rather than a fixed headcount goal. Chief employee representative Daniela Cavallo, who had been strongly critical of the plan when it was presented over the summer, now stated that the plan was "a necessity for our company to move successfully into the next decade without the associated undertakings coming only on the side of the employees." The deal stops short of immediately closing factories, with alternative uses for the plants now being explored. The Porsche-Piëch family, which controls a majority of VW's voting rights through Porsche SE, has pushed for faster action as returns and dividend flows come under pressure. Unions and management had publicly rowed before signing off on the plans, with the former accusing the latter of not being honest with the workforce after the figure of 50,000 possible job cuts surfaced in the media before being communicated internally. Volkswagen, which has some 650,000 employees, is already in the process of reducing headcount under an earlier restructuring, having already signed 37,000 contracts to reduce headcount mainly through early retirement as of August 21.
