Volkswagen plans to cut its sprawling model lineup by as much as 50%, a savings push that was unveiled after a closely watched supervisory board meeting that stopped short of agreeing on deeper workforce reductions.
The announcement followed a showdown at Thursday’s board meeting, where Chief Executive Officer Oliver Blume had planned to push for doubling job cuts to 100,000 and closing four plants in Germany.
VW offers roughly 150 model lines across its brands like Porsche, Audi, Skoda and commercial vehicles.
The pullback is meant to include more limited product options as well, reducing overall “offering complexity” and allowing development resources to be put toward the highest-return segments, VW said.
The plan didn’t outline firm targets for when the reduction might be achieved or which brands were in focus.
Europe’s biggest carmaker is facing its most significant restructuring in decades after profits in its biggest market, China, slumped and demand in Europe has stayed below pre-pandemic levels.
VW’s business model of developing and making cars for export from Germany isn’t viable anymore, according to CEO Blume.
While the company has already agreed to deep cuts in 2024 with workers, these aren’t enough after more challenging factors emerged.
US tariffs are weighing on Audi and Porsche, the group’s former cash cows, in particular.
In Europe, Chinese carmakers like Chery are increasingly gaining market share with affordable cars.
Details of the potential measures on sites in Germany and further job losses had leaked through ahead of the meeting, irking VW’s powerful labour representatives.
VW’s ongoing efforts to cut jobs and capacity weren’t enough “in the current economic and political environment,” Chief Financial Officer Arno Antlitz said late Thursday in a statement.
The decision follows weeks of tension with labour leaders and politicians over proposals to eliminate more jobs, shutter sites and carve out the VW brand, according to people familiar with the discussions.
“VW’s Future Plan reinforces our view that deeper restructuring is needed, with the lack of detail suggesting key decisions remain subject to negotiations with unions and Lower Saxony,” said Michael Dean, senior industry analyst, and Giacomo Reghelin, senior associate analyst.
“As China competition intensifies alongside higher US tariffs and softer European pricing, the concern is that, without a broader EU capacity reset and stronger policy support, the sector faces a prolonged run of profit warnings following BMW’s June guidance cut.”
Early indications from the labour side, which holds half the supervisory board seats, didn’t indicate any easing in the impasse.
“Enough is enough, this is the last straw,” Daniela Cavallo, the top labour representative, said in a statement, delivering an ultimatum for Blume to address workers by Friday or face extraordinary worker meetings across VW after the summer break.
VW’s 2024 pact with workers already calls for more than 35,000 reductions at the namesake brand in Germany by 2030, but management has argued that worsening conditions in China, Europe and the US mean those savings are no longer enough.
Any restructuring is difficult because of the company’s complex governance, where labour representatives hold half the seats on the supervisory board, and the state of Lower Saxony has significant influence.
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