German automaker Volkswagen Group has halted production at four plants and is moving ahead in earnest with a restructuring affecting 100,000 jobs.
On the 9th (local time), the Volkswagen Group supervisory board began discussions on the expense-cutting plan proposed by Chief Executive Officer Oliver Blume.
According to German business outlet Manager Magazin and weekly Der Spiegel, CEO Blume drew up a plan to cut 100,000 jobs, equivalent to 15% of its 657,000 employees worldwide, and to additionally shut down four plants in Germany.
Also that day, German daily Bild reported that the layoff target was 120,000, not the previously reported 100,000.
On 2024, Volkswagen management reached an agreement with the union to cut 35,000 jobs in Germany and halt production at two German plants.
Afterward, management raised the layoff target to 50,000. The current layoff scale is twice the previous target and is the largest in the auto industry's history, surpassing General Motors (GM) in the United States in 1991 with 74,000.
Volkswagen management is also said to have planned to sequentially halt production by 2034 at the Zwickau, Emden, and Hanover plants and at Audi's plant in Neckarsulm, sell the facilities to defense companies, and shift car production to lower-wage plants in Eastern Europe.
About 40,000 people work at these four plants alone.
Management also reportedly presented a plan to reduce the investment scale from the current €180 billion a year (about 310 trillion won) to €135 billion (about 233 trillion won) by 2031.
Der Spiegel said the goal of management is to raise the operating margin, which fell to 3.3% in the first quarter of this year, to 9% by 2030 through such expense reductions.
The union is pushing back against the record layoff warning.
On this day, IG Metall (metalworkers union), which represents Volkswagen workers, held protest rallies at the Wolfsburg headquarters in Lower Saxony where the board meeting was taking place and at 12 Volkswagen business sites.
Local media predicted the restructuring plan by management is unlikely to pass the board without a compromise with the union.
It is rare for the Volkswagen supervisory board, composed of 10 shareholder representatives and 10 worker representatives, to make decisions by vote without a consensus.
The government of Lower Saxony in Germany, which holds 20% equity in the group, is also opposing job cuts, recently proposing joint production with a Chinese company.
Management has reportedly even prepared a plan to circumvent the Volkswagen law by separating the core Volkswagen brand into a standalone subsidiary like Porsche.