Volkswagen’s Drastic Job Cuts: The Price of Survival
Breaking the Pact
Just a year and a half ago, Volkswagen reached an agreement with unions to lay off “only” 35,000 employees to ensure the continuity of certain factories, with plans to maintain operations until 2030. This arrangement, while unfavorable, seemed acceptable to preserve the jobs of many employees. However, the situation has drastically changed, and Volkswagen has announced that this pact is broken—the numbers simply don’t add up anymore.
Record Layoffs Ahead
According to the German magazine Manager Magazine, CEO Oliver Blume has revealed a new adjustment plan to the board of directors, signaling the most significant layoffs the company has ever proposed: up to 100,000 jobs worldwide, coupled with the potential closure of four factories in Germany. This striking announcement threatens the livelihoods of nearly one in six employees.
Scale of the Crisis
Volkswagen’s global workforce stood at over 662,000 at the end of 2025. Losing 100,000 jobs would represent a staggering 15% cut in force, marking the largest restructuring in the company’s 89-year history. Factories slated for closure include those in Hannover, Zwickau, and Emden, along with the Audi plant in Neckarsulm. The company is also planning a 15% reduction in investments over the next five years and an 11 billion euro spending cut before the end of the decade.
Financial Struggles
The alarming numbers from the first quarter of 2026 provide context for this drastic move. Operating profit has fallen by 14% year-on-year to 2.5 billion euros, with a margin of just 3.3%. In contrast, sales have declined by 7%, failing to meet analyst expectations of nearly 4 billion euros in operating profit.
Chief Financial Officer Arno Antlitz has underscored the seriousness of this predicament, stating the need to radically transform the business model to achieve sustainable improvements. The company has already reduced approximately 29,000 positions since 2023 and slashed its production capacity from 12 million to 9 million vehicles a year—yet these actions have not been sufficient to offset declining sales.
External Pressures
Two significant external pressures have contributed to Volkswagen’s troubled scenario. First is competition from Chinese manufacturers, whose vehicles represented 7% of EU sales in 2025, a number that exceeded one million for the first time. European exports to China have plummeted by 43%, causing Volkswagen to lose market share in one of its largest markets.
The second pressure comes from the United States. Tariffs imposed by the Trump administration on European vehicles have adversely affected Volkswagen, whose manufacturing base is situated in tariff-impacted areas. At a recent shareholders’ meeting, Blume pointed out that “never before has the risk situation been so high.” To enhance liquidity, Volkswagen recently sold a 51% stake in its Everllence marine engine division to Bain Capital for 7.4 billion euros, potentially signaling more asset sales on the horizon.
Union Concerns and Resistance
The announcement has not been well received by unions. The late 2024 agreement with IG Metall assured that there would be no factory closures or forced layoffs in Germany until at least 2030. This new plan undermines those commitments, sparking outrage among union leaders.
Daniela Cavallo, president of the Volkswagen works council, and Christiane Benner, head of IG Metall, issued a joint statement expressing strong opposition to the proposed layoffs: “If these plans go ahead, we will stop them with all our forces.” A crucial supervisory board meeting on July 9 will debate the workforce adjustment plan that threatens one in six employees, and the outcomes of this meeting will significantly shape Volkswagen’s future.