Volkswagen is reportedly preparing a savage round of cuts as it looks to improve profitability, and give it room to fight off Chinese automakers, which are rapidly gaining sales in all corners of the globe outside of the United States.
According to Manager Magazin and Reuters, Volkswagen Group CEO Oliver Blume has presented a plan to upper management and the supervisory board that will see the automaker close four plants in Germany, and cut 100,000 jobs worldwide. This is on top of the 50,000 jobs the company has committed to axing by the end of the decade.
The four plants that will be closed are Hanover, Zwickau, Emden and Audi’s factory in Neckarsulm. The news wire estimates closing these sites would put 45,000 people out of work. At the end of 2025 the group employed 667,164 people, around 43 per cent of which are based in Germany.
On top of job cuts, the plan aims to cut investment levels by 15 per cent to just over €130 billion (A$215bn) over the next five years. Mr Blume is also hoping to split the core Volkswagen brand and the group’s parts operation into separate entities.
Naturally the company is expecting significant resistance from its unions, as well as the German state of Lower Saxony, which is the automaker’s second largest shareholder.
Speaking to Reuters, a company spokesperson declined to comment on the “confidential documents”, while also noting “the entire group, including its brands and subsidiaries, must undergo far-reaching change”.
The IG Metall union and Volkswagen works council put out a joint statement to the media declaring, “Should such plans go ahead, we would do everything in our power to prevent them.”
Under German law, unions occupy half the seats on the company’s supervisory board. In 2024, the unions and Volkswagen agreed the automaker wouldn’t close any German plants before the end of the decade.
Volkswagen Commercial Vehicles has its headquarters in Hanover, and the plant there currently produces the ID. Buzz and ‘T7’ Multivan.
As part of the company’s pivot from diesel to EVs, in 2020 the Zwickau plant was converted to produce only electric vehicles, and currently makes the Volkswagen ID. 3, ID. 4, ID. 5, Cupra Born, and Audi Q4 e-tron.
Constructed in the 1960s, the Emden factory once produced the original Beetle, as well as the Passat. Today it is an EV-only plant, and produces the ID.4 and ID. 7.
Audi’s factory in Necksarulm is responsible for two core models, the A5 and A6, as well as the soon-to-be-retired A8.
The need for these drastic cuts comes from the company’s shrinking profit margins, which, it’s said, is largely due largely to the growth of Chinese automakers in the past few years, and the rapid decline of Volkswagen’s business in China.
Volkswagen jumped into the Chinese auto market when it was opened up to outside investment in the 1980s. As a result it held the number one spot from 1986 until 2023, when it was overtaken by BYD.
In 2025, the group sold 2,693,800 vehicles in China, down 8.0 per cent. Although Volkswagen remains the top brand for ICE (internal combustion engine) vehicles in China, it lags behind its rivals in the rapidly evolving EV space.