Volkswagen's board has approved a plan to cut an additional 50,000 jobs by 2030, constituting the most extensive transformation in the company's 89-year history. This move is part of a broad restructuring aimed at addressing declining sales and increasing competition, particularly from Chinese rivals.
In total, the company plans to reduce its workforce by 100,000 positions by the end of the decade. Volkswagen, which employs approximately 660,000 people globally and owns brands such as Audi, Porsche, and Skoda, did not specify how the job reductions would be distributed across its various brands and regions or provide a precise timeline.
Halving Vehicle Lineup
The overhaul also includes plans to halve the company's vehicle lineup by the end of 2030. Volkswagen intends to focus on its most popular models and increase production volume for each to lower costs. The company stated that a "fundamental adjustment of the global workforce capability is necessary" to maintain its competitiveness.
Facing Market Challenges
Volkswagen has experienced a significant downturn in sales in China, a historically key market, due to the rise of domestic competitors like BYD. Additionally, sales in the United States have been impacted by tariffs imposed on imported vehicles. The company is also evaluating the future of four of its German plants, including Emden, Zwickau, Hanover, and Neckarsulm, indicating that new models will only be allocated to these locations if production costs can be reduced.
Union Agreement and Market Reaction
The restructuring plan, dubbed the 'Future Plan,' was developed in cooperation with unions and the company's second-largest shareholder, Lower Saxony. Daniela Cavallo, the chief employee representative, stated that the plan was essential for the company's future success.
Following the announcement, Volkswagen shares rose by 7% in early trading. Analysts at RBC Capital Markets described the board and union approval as a "positive surprise," noting that the decision is a significant step toward making Volkswagen more cost-competitive against Chinese automakers expanding in Europe.