Volkswagen is considering an additional 50,000 job cuts on top of the existing 50,000 already planned, as Europe's largest carmaker seeks ways to address mounting challenges from US tariffs, competition in China, and profitability concerns in electric vehicles. According to an internal memo seen by AFP, this would bring total potential job cuts to 100,000 positions, which would mark the biggest restructuring in the global auto industry's history—surpassing the 50,000 jobs General Motors cut when the company declared bankruptcy in 2009. The move comes just days after CEO Oliver Blume appeared to rule out factory closures, telling Germany's Bild am Sonntag that "there are smarter solutions" than shutting plants. However, Blume's memo to workers revealed that "as half of our overheads stem from staff costs, a theoretical calculation -- assuming no change in labour costs -- would result in the loss of around 50,000 jobs."
German automakers experienced a dramatic collapse in Chinese sales during the second quarter, with Volkswagen, Mercedes-Benz and BMW all recording drops of at least 30% in the April-June period. According to company sales data reported by Reuters, Volkswagen saw the steepest decline at 36.6% year-on-year, while Mercedes-Benz and BMW recorded drops of 30% and 30.6% respectively. As Marco Schubert, a member of Volkswagen's extended executive committee for sales, acknowledged, "The situation remains challenging in China, where we were unable to escape the overall market decline of around 20%, despite initial positive momentum from our newly launched, locally developed electric vehicles there."
Labor officials have accused Blume of stoking fear in the workforce and demanded he explain himself directly to staff after details of a sweeping restructuring plan, including as many as 100,000 job cuts and plant closures in Germany, were published in the media. The works council said there has "a massive loss of trust" in Blume as a result of the plans leaking out before the board gathered to discuss them. "Virtually nothing" remains of any goodwill he had initially earned among staff after taking over in 2022, and he will have to answer to them at meetings to be held after the summer break. The restructuring plan was rejected by 12 of the 19 board members at a meeting Thursday in Wolfsburg, with management outlining only vague goals including an effort to reduce complexity across product offerings.
CEO Blume confirmed that the future of four German factories—Emden, Hanover, Zwickau and Neckarsulm—was uncertain, stating that "as things stand today, we cannot confirm that the Emden, Hanover, Zwickau and Neckarsulm plants will be able to operate competitively into the 2030s." The German car titan faces intense pressure from US tariffs, slimmer profit margins on electric cars, and above all, fierce competition in China, where carmakers are now increasingly exporting to Europe. In his memo to workers, Blume emphasized that "We need to become more efficient, more robust and simpler. We must reduce our costs," noting that VW's costs are about 20% higher than those of competitors and hence, overheads need to be cut to a "competitive level."
Despite their strong performance in China, German automakers were unable to offset their Chinese losses in other regions during the second quarter. Volkswagen recorded a global sales decline of 8.6%, while Mercedes-Benz and BMW posted drops of 8% and 4.9% respectively. According to ETAuto, while China faced severe challenges, Volkswagen achieved 7.7% growth in North America and 1.8% growth in Western Europe during the quarter. However, the company's core Volkswagen brand delivered slightly more than 1 million vehicles in the second quarter, down 14% from a year earlier. Audi deliveries declined 8%, while Porsche deliveries fell 18%. CEO Blume acknowledged that while "Volkswagen's products are very popular, but we just earn too little money with them," emphasizing the need to continue reducing costs across all areas to improve profitability.
