Volkswagen prepares painful restructuring with up to 50,000 jobs at risk

Wednesday 09 - 19:00

By: Azzat Manal

Volkswagen prepares painful restructuring with up to 50,000 jobs at risk

Volkswagen is preparing for a major restructuring aimed at significantly reducing costs and improving profitability, with up to 50,000 jobs potentially affected worldwide in the coming years, around half of them in Germany.

The German automaker’s supervisory board has unanimously approved a broad restructuring strategy that gives the executive management team, led by CEO Oliver Blume, greater scope to reshape operations and reduce costs by billions of euros. The plan includes lowering annual vehicle production to around 9 million units while targeting an operating profit margin of 9%.

Lower production volumes and increased efficiency are expected to form part of a wider effort to make the group more competitive at a time when the global automotive industry is undergoing rapid transformation. Volkswagen faces pressure from high production costs in Germany, intensifying competition from Chinese manufacturers and the costly transition toward electric and software-driven vehicles.

Olaf Lies, premier of Lower Saxony, warned that Volkswagen was entering a difficult and potentially prolonged period of change. He stressed that the figure of 50,000 jobs should not be interpreted as a finalized list of positions or plants to be eliminated, but rather as an estimate derived from the company’s cost-reduction and profitability targets.

Around half of the potential job reductions are expected to take place in Germany, adding to workforce reductions already implemented across the Volkswagen Group.

Lower Saxony has a particularly influential role in the company because the German state holds 20% of Volkswagen’s voting rights, giving it an effective veto over major strategic decisions. Lies described the agreement as an important step toward avoiding internal confrontation but cautioned that the restructuring process was far from complete.

He argued that Volkswagen’s transformation should go beyond workforce reductions and focus on making the company faster, less bureaucratic and more efficient. In particular, he called for shorter product-development cycles, quicker decision-making and better use of the group’s technological capabilities.

The state government also wants Volkswagen to turn its engineering and technological strengths into more competitive products while maintaining a strong credit profile and preserving its appeal to investors. Lies said the company must generate returns that reflect its position as one of the world’s leading automotive groups.

The restructuring comes as Volkswagen seeks to adapt to a changing global market marked by the rapid expansion of electric vehicles, shifting consumer demand and growing competition from Asian automakers. The company will face the challenge of balancing cost reductions with investment in new technologies and future vehicle platforms.

Lies ultimately called for management, employees and other stakeholders to share the burden of the transformation fairly, arguing that Volkswagen’s future competitiveness will depend on improvements across sales, administrative costs, productivity and its workforce.