Volkswagen is considering eliminating up to 100,000 jobs and closing four assembly plants in Germany as part of what could become the largest restructuring in the company’s history. The proposal, which will be discussed by the supervisory board on July 9, comes as the automaker faces declining demand in Europe, intensifying competition from Chinese manufacturers, and US tariffs on imported vehicles—pressures management says have made its current business model unsustainable.
According to people familiar with the plans, the proposal includes closing facilities in Hannover, Zwickau, Emden, and Audi’s Neckarsulm plant. More than 45,000 jobs would be directly affected by the plant closures, adding to approximately 50,000 workforce reductions already planned. If implemented, Volkswagen’s total workforce reduction would reach 100,000 employees.
The scale of the proposal would make it one of the largest restructurings ever undertaken by a global automaker, comparable to General Motors’ restructuring before and during its 2009 bankruptcy, when the company eliminated up to 74,000 jobs over four years and closed or idled 21 plants.
Volkswagen CEO Oliver Blume presented the proposal to senior executives earlier this week to secure internal support before negotiations with labor representatives and shareholders. The company declined to comment on what it described as confidential documents.
“The entire group, including its brands and subsidiaries, must undergo far-reaching change,” a Volkswagen spokesperson said.
The restructuring follows several initiatives already underway. Volkswagen recently agreed to approximately 28,000 employee departures and reduced its annual production capacity from 12 million vehicles to about 9 million units. The company is also preparing to divest its marine engine business in a transaction that could exceed €8 billion (US$9.4 billion).
According to reports, management is also evaluating a roughly 15% reduction in planned investments, lowering spending to slightly more than US$148 billion over the next five years. The proposal reportedly includes separating Volkswagen’s core passenger car brand, parts operations, and selected business units into standalone entities as part of a broader corporate restructuring.
Investor reaction reflected uncertainty over the plan. Volkswagen shares fell 3.4% to their lowest level in 16 years after reports of the proposal emerged.
“The high costs are only a symptom, not the cause,” said Ingo Speich, corporate governance representative at shareholder Deka. “They do not address the root cause, which is weak sales.”
“Volkswagen must bring attractive products with strong demand to market. That would end the debate over costs,” he added.
The proposal is expected to face strong opposition from labor representatives and political stakeholders. Volkswagen’s works council and Germany’s IG Metall union said they would oppose any attempt to implement the measures.
“If such plans move forward, we would do everything possible to prevent them,” the works council and IG Metall said in a joint statement.
Lower Saxony, Volkswagen’s second-largest shareholder through the regional government, also rejected the proposal. The state holds significant influence over strategic decisions through Volkswagen’s governance structure.
In fiscal year 2025, Volkswagen employed 667,164 people worldwide, with nearly 43% of its workforce based in Germany.
The restructuring reflects broader structural pressures affecting the global automotive industry. Chinese manufacturers continue expanding internationally while increasing their presence in Europe. According to AlixPartners, the combined market share of non-Chinese automakers in China declined to 32% in 2025 from 57% in 2020.
Volkswagen, which had been China’s largest automaker for years, was overtaken by BYD in 2024 and fell to third place in 2025. Chinese manufacturers, including BYD, Chery, SAIC, and Leapmotor, also doubled their combined European market share through May, according to ACEA.
At the same time, Audi and Porsche remain exposed to US tariffs because every vehicle the two brands sell in the United States is imported. Volkswagen is responding by accelerating model development, evaluating local production options for Audi in North America, and preparing additional cost reductions at Porsche.
In China, Volkswagen is shortening vehicle development cycles, reducing engineering costs, and expanding partnerships with Xpeng and SAIC to improve competitiveness.
The company continues to target an operating margin of 8% to 10% by 2030 to support shareholder returns while maintaining investments in electrification, software, and next-generation mobility technologies. Management also faces the challenge of simplifying a product portfolio of more than 150 models across multiple brands, many of which compete in overlapping market segments.
Despite previous restructuring efforts following the diesel emissions scandal, investors remain cautious about Volkswagen’s ability to implement significant reforms within its governance model.
“The ownership structure makes any substantial change extremely difficult,” said corporate governance expert Christian Strenger. “Oliver Blume is doing everything possible, but with this supervisory board, it is extremely difficult to imagine significant cuts.”