German car giant Volkswagen said on Thursday that its board had cleared a proposal to cut another 50,000 jobs, adding to the 50,000 cuts already agreed as the company undertakes its biggest restructuring. The combined reduction of 100,000 jobs would be the largest such overhaul in the global car industry.
Volkswagen also said that management and unions had agreed that the long-term future of its four German factories in Hannover, Emden, Zwickau and Neckarsulm could not be assured. The company said it was considering other possible uses for the sites.
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Volkswagen to cut another 50,000 jobs
As part of the plan, Volkswagen would cut its workforce by another 50,000, phase out four German factories to tackle costly excess capacity and reduce its model range from around 150 vehicles to about half that number.
The German automaker is facing growing pressure from US tariffs, lower profit margins on electric vehicles and, most importantly, strong competition in China. Chinese carmakers are also expanding their exports to Europe, news agency AFP reported.
The planned reductions are reportedly expected to affect both managers and factory workers. The company will also simplify its management structure, aimed at making decisions faster.
{{/usCountry}}The planned reductions are reportedly expected to affect both managers and factory workers. The company will also simplify its management structure, aimed at making decisions faster.
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Inside the plan
The restructuring aims to lift the company's operating margin to 9% by 2030, based on annual sales of around 9 million vehicles, news agency Bloomberg reported.
Workers received assurances that none of the factories would be shut down immediately. Decisions over the future of individual sites will instead be discussed and settled over the next few months.
Volkswagen said it currently has excess annual production capacity of about 500,000 vehicles across Europe.
The company said its plants in Emden, Hannover, Neckarsulm and Zwickau do not have competitive production plans for the period following the phasing out of their current models between 2031 and 2034. Volkswagen will now examine alternative uses for the four sites.
Volkswagen shares hit 11-week high
Volkswagen shares rose to an 11-week high after the supervisory board of Europe's biggest carmaker reached an agreement centred on major job reductions, avoiding a dispute between its key stakeholder groups.
Investors and analysts welcomed the agreement, saying it showed that Volkswagen, which employs more than 650,000 people and has a complex structure with influential stakeholder groups, can still take major decisions during a crisis.
Volkswagen shares were 5.9% higher at 1046 GMT (4:16 PM IST), making them the second-biggest riser on the pan-European STOXX 600 index. The stock had earlier reached its highest level since June 18.
The agreement did not specify where or when the job cuts would take place. Volkswagen CEO Oliver Blume had previously said that Germany would have to account for half of the planned savings, pointing to roughly 25,000 cuts across its operations in the country.
With inputs from agencies