The Volkswagen Supervisory Board approved a cost plan proposed by CEO Oliver Blume: an adjustment of about 50,000 jobs (including management) and the cessation of car production at four factories in Europe, reducing the number of models by about half. Previously, the group had a plan to cut about 50,000 jobs by 2030, bringing the total to about 100,000, close to one-sixth of the global workforce of approximately 625,000 to 660,000 employees.

The plants to be closed are in Emden, Zwickau, Hanover, and Audi's Neckarsulm. The company stated that there is an overcapacity of about 500,000 vehicles in Europe, and these factories "cannot guarantee a competitive future production allocation," but will seek alternative uses, including producing models for the Chinese market or transferring to other automakers or defense companies, among other previously mentioned options. The goal is to increase the production volume of single models, dilute fixed costs, and shorten decision-making levels. Blume has calculated that indirect costs are about 20% higher than competitors, with labor accounting for about half of that, leading to the theoretical value of cutting about 50,000 jobs.

Driving factors include low-priced electric vehicles from China and tariffs in the U.S. The operating profit for 2025 is projected to be about €8.9 billion, a decrease of about 53% compared to 2024; the operating profit for the first quarter of 2026 is expected to be €2.46 billion, a further year-on-year decline of about 14.3%. A spokesperson stated that the past model of "manufacturing in Europe and exporting globally" can no longer cover all brands. Lower Saxony, as the second-largest shareholder, along with the IG Metall union and the employee council, had vowed to block plant closures; the plan is still pending approval from the Supervisory Board. The Chattanooga plant in the U.S., with about 4,000 employees, is not on the closure list.

The annual savings target of about €6 billion has previously been linked to restructuring. Halving the number of models means a contraction of the brand matrix, and the software subsidiary Cariad, along with Audi and Porsche, has already been included in the previous round of layoffs. The union may still delay the plant closure timeline during the implementation phase using Germany's co-determination rights; approval does not mean layoffs will occur the next day.

In market mechanisms, what is bought is a decrease in fixed costs and single vehicle profits, while what is sold is German manufacturing jobs and local tax revenues. Funds will exit European production capacity and shift towards models and regions that can compete on price. Beneficiaries will be shareholders looking at profit margins and competitors in the Chinese market; those under pressure will be the cities where the four plants are located and suppliers still configured according to old capacities. Stock prices have partially priced in rumors, and the board has approved turning options into execution calendars.

Supplement: Reports indicate that the group is also discussing the separation of the Volkswagen brand from its parts business; the board's public statement that day focused on jobs, models, and the four plants.

Source: Public Information