VW CEO Oliver Blume outlined a plan to eliminate as many as 50,000 more jobs globally as he attempts a far-reaching overhaul to reduce costs at Europe’s biggest carmaker.
The German manufacturer’s overhead is higher than competitors’ by roughly one-fifth, Blume said in an interview published on VW’s intranet.
Reaching parity implies a “theoretical deduction” of about 50,000 positions, on top of a similar amount that’s part of a cost-savings effort launched in 2024, he said.
“Group headcount has been growing for decades to a level that’s no longer viable today,” Blume said, according to the memo seen by Bloomberg News.
“That’s because of changes in markets and negative effects outside of our control that weigh in the region of double-digit billion euro amounts.”
VW has come through some tumultuous weeks, with a worsening business outlook prompting renewed pressure to make cuts.
Blume’s plan — including the reported doubling of the original 50,000 reductions and the possible closure of four plants in Germany — met labour opposition and failed to win initial board backing.
The sites at risk are in Emden, Hanover, Zwickau and Neckarsulm. In the memo, Blume said there were “smarter options” than closing factories to address high expense levels and a drop in demand.
He added that he was encouraged by an average 20% improvement in factory costs in Germany over the past year.
“It’s also true that today, we can’t confirm a competitive allocation for the plants,” he said, referring to the company assigning models for production around its sprawling web of sites.
VW, which employs over 657,000 people worldwide, is grappling with a number of challenges that have also beset competitors Stellantis, BMW and Mercedes-Benz.
The most significant is the slump in sales in China, where buyers struggle with a protracted real estate crisis. US tariffs are also hurting profit at the usually lucrative Audi and Porsche luxury brands.
Paired with a sluggish European market, VW’s high costs and underused factories have moved into focus.
Blume said last month that the company’s business model of developing and exporting cars from Germany wasn’t viable anymore.
Last month, VW sold a 51% stake in its ship engine unit Everllence, generating proceeds of about €7.4 billion (R138 billion).
VW has a portfolio of more than 2,000 stakes and businesses, which is an “important area for change,” Blume said.
The company also owns the Ducati motorcycle brand and a stake in US solid-state battery maker QuantumScape.
It plans to examine which parts of its portfolio contribute to its core automotive business and returns.
What it means for South Africa
Despite no decisions affecting VW in South Africa having been announced, the Chairperson of the Select Committee on Economic Development and Trade, Sonja Boshoff, said these developments serve as a warning.
“The reality is that every country is competing aggressively to retain automotive investment. South Africa cannot simply assume that future production lines and new model allocations will come our way,” she said.
“We have to earn them by creating an environment where manufacturers can compete successfully.”
The chairperson noted that the pressures facing VW, including high production costs, shrinking profit margins, increased competition from China, and global trade tensions, are challenges confronting the automotive industry worldwide.
Boshoff called on the South African government to treat the latest developments as an urgent reminder to accelerate reforms to strengthen local automotive investment competitiveness.
“We need policy certainty, reliable electricity, efficient ports and rail infrastructure, reduced regulatory burdens and the rapid implementation of measures that position South Africa to remain a preferred destination for automotive investment,” she said.
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