Volkswagen Weighs Deepest Cut in Its History as China Bites

Volkswagen is preparing what could be the largest restructuring in automotive history, with chief executive Oliver Blume said to be assessing the closure of four German plants and the elimination of as many as 100,000 jobs as Europe's biggest carmaker struggles against Chinese rivals and shrinking margins.

The proposals, presented to senior management last week and to be discussed by the supervisory board on 9 July, would shutter sites at Hanover, Zwickau, Emden and Audi's Neckarsulm plant, which together employ more than 45,000 workers. The reductions would double the 50,000 cuts already planned for Germany by 2030, taking the total toward 100,000 of a workforce of roughly 657,000, according to Manager Magazin, with Reuters corroborating the broad outline. Volkswagen declined to comment on confidential documents but said the group must undergo far-reaching change.

The scale would surpass General Motors' bankruptcy-era overhaul, when the American carmaker cut up to 74,000 jobs. Manager Magazin reported the group is also weighing a 15 per cent reduction in capital spending, to just above €130bn over five years, alongside a possible spin-off of the core VW brand and components operations into standalone entities.

The pressures are acute. First-quarter net profit fell 28 per cent to €1.56bn, US tariffs are estimated to cost around €4bn a year, and Chinese sales tumbled 20 per cent as domestic champions such as BYD gain ground. The shares recently traded at 16-year lows.

The plan sets up a bruising confrontation. IG Metall and the works council reacted swiftly, and any closures would breach a 2024 job-security agreement protecting German plants this decade. For Lower Saxony, the group's second-largest shareholder, the political stakes are as high as the industrial ones.