Volkswagen Group, the German automaker that is moving to cut 50,000 jobs by 2030, has unveiled a massive restructuring plan to shed 50,000 more. Weakness in China, sagging productivity and U.S. tariff pressures have combined to put as many as 100,000 jobs at risk.
On the 3rd (local time), the Volkswagen Group supervisory board unanimously approved the management board's "Future Plan 2030." The plan says workforce adjustments of about 50,000 across the group, including management positions, are needed. Reuters called it "the most extensive restructuring in Volkswagen Group's 89-year history."
If implemented, Volkswagen Group's job cuts would rise to as many as 100,000. Earlier in 2024, labor and management at Volkswagen Group agreed to cut a total of 50,000 jobs, including 35,000 at core brands, by 2030, while pledging not to close plants in Germany through the late 2020s.
But in July, news that Volkswagen Group had effectively overturned the deal and was weighing 100,000 job cuts and the closure of four plants heightened tensions between labor and management. With the supervisory board's approval, the large-scale restructuring is effectively underway. The 100,000 jobs amount to about 15% of Volkswagen's 657,000 employees worldwide.
Behind the tough restructuring push are weak sales in China, delays in the shift to electric vehicles, deteriorating productivity at German sites, and U.S. tariff burdens. As a result, second-quarter operating profit this year fell 9.5% from a year earlier to 3.469 billion euros (about 5.45 trillion won).
Beyond headcount cuts, the group plans to draw up a plan to overhaul production structures at its European factories by the end of June next year. The supervisory board said, "European production capacity currently exceeds market demand by more than 500,000 vehicles," adding, "The Emden, Zwickau, Hanover and Neckarsulm plants will find it difficult to secure competitive future production volumes from 2031 to 2034." The group is reviewing ways to repurpose these plants.
It will also revamp its North American and Chinese strategies. In North America, it will focus on high-margin segments, and in China, it will respond in line with revised growth outlooks while expanding exports to the "Global South" (emerging markets in Asia and Latin America).
It will also simplify its governance structure and streamline investment by trimming one-third of its equity and business portfolio. Volkswagen Group said, "Non-strategic institutional sectors will be sold or restructured, and the real estate portfolio will also be subject to review," adding, "Our top financial goal is to achieve a 9% operating margin by 2030."