Automotive giant Volkswagen is embarking on the most radical restructuring in its history in an attempt to restore its profitability. Faced with European production capacity far exceeding current demand, with an excess of over 500,000 units, the supervisory board has approved the cut of an additional 50,000 positions. These cuts are in addition to 50,000 departures already recorded since 2024 within a group that currently employs approximately 652,000 people. This ambitious plan aims to increase the company's operating margin, currently limited to 3.8%, to 9% by 2030.
The German manufacturer is bearing the brunt of a particularly unfavorable economic environment, marked by increased competition from Chinese players, US tariffs, and a persistent stagnation of sales on the European market since the health crisis. This pressure is reflected in declining financial results, with an 8.4% drop in vehicle sales volume and an 11.6% decline in operating profit over the last half-year. To meet these challenges, management plans not only to reduce its workforce but also to remove half of its model catalog over the next nine years to simplify its range and achieve massive economies of scale.
The fate of four major industrial sites located in Emden, Zwickau, Hanovre, and Neckarsulm remains in limbo: no new production lines will be allocated to them without a drastic cost-reduction plan, prompting the company to explore alternative uses for these infrastructures. Furthermore, the issue of governance remains a major point of friction. While unions claim to have fended off the proposed spin-off of the components business—seen as a threat to co-determination—internal sources suggest that this option remains on the table, illustrating persistent tensions with the Land de Basse-Saxe, an influential shareholder with veto power.
The stakes of this transformation go beyond the manufacturer's internal scope, as they affect the very heart of the German industrial model. While financial markets welcomed the announcement with a 7.4% increase in the share price, the success of this plan will now depend on flawless operational execution within a complex social climate. Between the need to regain competitiveness in the face of global electrification and the preservation of its European industrial fabric, Volkswagen is beginning a perilous transition whose outcome will determine its long-term survival in a sector undergoing a major technological shift.