Interpretation - The Road Ahead for Volkswagen’s Restructuring

Rachel More/Christina Amann

Reuters, Berlin, September 25 - Although Volkswagen VOWG_p.DE CEO Oliver Blume has obtained stakeholder approval for his restructuring plan (link), he still faces tough negotiations in Germany over layoffs and plant closures, while also grappling with fundamental questions regarding the car manufacturer's US strategy.

Here is a guide to what happens next.

Reviewing the US and Chinese markets

The Volkswagen supervisory board will meet on Friday, with issues ranging from restructuring details to the US strategy still to be resolved—for the world’s second-largest automaker, huge tariffs have already resulted in billions of euros in losses in the US.

Volkswagen also needs to resolve a long-standing question: whether its premium brand Audi should establish an independent production base in the US—an issue that requires supervisory board approval.

The German company also aims (link) to shift toward the most profitable segments in the US, such as pickups and large SUVs.

While half of the newly added 50,000 job cuts may occur in Germany, Volkswagen is also restructuring in other regions.

To address declining sales (link), the company has already reduced its headcount in China from 90,000 to 70,000 and is expected to make further cuts, with production capacity in China set to be reduced by 500,000 vehicles.

No strikes for now

Germany's largest industrial union is bound by a strike moratorium, valid until January 1, 2027, and is currently seeking other ways to exert pressure on management.

On September 30, Germany’s metalworkers union (IG Metall) representatives are expected to negotiate with management over concerns that the restructuring could violate the 2024 labor contract (link).

This agreement triggered the first wave of 35,000 layoffs in Germany, in exchange for the company’s promise of job security until the end of this decade and investment in plants currently at risk of closure.

Although at a board meeting three weeks ago, labor representatives and Lower Saxony—the second-largest shareholder in Volkswagen—no longer opposed the (link) overall plan, they are still working to stem local job losses.

The union wants the plan to cut 25,000 jobs in Germany to be only a starting point for negotiation, focusing on cost control rather than on a pure job cut target.

At-risk plants face a critical moment

Volkswagen will develop a European production plan by the end of June 2027, which marks a crucial period for the plants already at risk.

In response to persistently weak demand, the company plans to reduce capacity by more than 500,000 vehicles, and the Emden, Zwickau, Hanover, and Neckarsulm plants are scheduled to be gradually closed from 2031 to 2034.

Possible solutions include switching to the defense sector or partnering with China, but so far, no concrete plans have been announced.

There is also room for adjustments in working hours (link), as per the 2024 agreement, which allows for negotiations to introduce a four-day workweek if Volkswagen encounters financial difficulties.

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