Volkswagen Eyes Up To 100,000 Global Job Cuts Amid Profit Decline
The German auto giant cites increasing competition from Chinese brands and rising costs as key factors in its restructuring plans.
Volkswagen Group, parent to brands including Porsche, Audi, Seat, and Skoda, is considering eliminating up to 100,000 jobs worldwide, more than double the previously indicated number. This significant reduction is driven by a steep decline in profits and intensified competition, particularly from Chinese automakers entering the European market.
In a memo to staff, chief executive Oliver Blume stated that the group's costs are approximately 20% higher than those of rival companies, necessitating a substantial reduction in outgoings. Blume indicated that the company is currently assessing the necessary and feasible adjustments across all brands, companies, and regions to achieve greater efficiency, robustness, and simplicity. He noted that alternative uses for four German factories facing potential closure have not yet been confirmed. Two of these plants, in Zwickau and Emden, are currently involved in electric vehicle production but are considered expensive to operate, alongside facilities in Hanover and Neckarsulm.
Volkswagen's financial performance has seen a notable downturn in recent years. The group's operating profit fell from €22.6 billion in 2023 to €19.1 billion in 2024, and further to €8.9 billion in the most recent year. A significant factor contributing to this decline has been a drop in sales in China, a market that was once a major revenue source. Sales in China decreased by 26% in the first half of the current year. In the United States, sales have fallen by over 7%, partly attributed to tariffs introduced by the Trump administration on imported vehicles.
Simultaneously, Chinese automotive brands have been expanding their presence in international markets, introducing new technologies and leveraging lower production costs. This competitive pressure is forcing established manufacturers like Volkswagen to manage their own costs more stringently and contend with shrinking profit margins.
Earlier discussions in late 2024 between Volkswagen and the German trade union IG Metall resulted in an agreement to cut 35,000 jobs at the VW brand by 2030 in a "socially responsible manner," with an additional 15,000 job reductions planned across other brands. However, the current proposals under consideration appear to be far more extensive.
Last week, protests occurred at various Volkswagen sites in Germany ahead of a supervisory board meeting that included both company management and labor representatives. Some industry analysts suggest that Volkswagen may have intentionally publicized the 100,000 figure as a negotiating tactic, implying that the final number of job cuts could ultimately be lower. The group includes brands such as Porsche and Audi.