VW mulls 100,000 job cuts to close 20% cost gap with rivals
Volkswagen has doubled its global redundancy target as a collapse in Chinese sales and rising US tariffs expose a crippling cost disadvantage against cheaper competitors.
Volkswagen is preparing to shed up to 100,000 jobs worldwide, chief executive Oliver Blume confirmed, doubling a previous target of 50,000 German redundancies by 2030. In a memo to staff, Blume warned that the group's costs remain 20% higher than those of its competitors. "We need to become more efficient, more robust and simpler. We must reduce our costs," he wrote.
The drastic restructuring reflects a dramatic profit erosion at Europe's largest carmaker. Operating profit fell from €22.6bn in 2023 to €19.1bn in 2024, before collapsing to just €8.9bn last year. This rapid deterioration has been driven primarily by a 26% plunge in Chinese sales during the first half of this year, compounded by a more than 7% drop in the US market where tariffs introduced by the Trump administration have disrupted imports.
China was once one of VW's most lucrative markets, but the group is now losing ground to domestic manufacturers that are expanding aggressively into international markets. These Chinese rivals leverage lower production costs and introduce new technologies faster than European legacy brands. This competitive shift has forced established automakers to slash profit margins to remain viable.
The cost disparities are most visible in VW's domestic manufacturing footprint. Blume stated the company has been "unable to confirm" alternative uses for four German factories previously threatened with closure. The plants at Zwickau and Emden, which are used for electric car production, alongside facilities in Hanover and Neckarsulm, are widely viewed as too expensive to run.
The revised global job cuts far exceed a late-2024 agreement with the German trade union IG Metall. That deal, struck after threats of mass strikes, outlined 35,000 reductions at the VW brand and 15,000 at other marques by 2030, to be handled in a "socially responsible manner."
Widespread protests erupted at VW sites across Germany last week ahead of a supervisory board meeting that includes both labour representatives and company managers. Some industry analysts suggested to Agence France Presse that publicising the 100,000 figure is a deliberate negotiating tactic, meaning the actual cuts will likely be lower. "We are currently assessing across all brands, companies and regions how many adjustments are actually necessary and feasible," Blume noted.
