Cars are parked in front of the Zwickau Volkswagen Plant on July 9, 2026 in Zwickau, eastern Germany.
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VolkswagenManagement plans to significantly scale back its model and further reduce capacity, although the German auto giant stopped short of announcing any job cuts following intense discussions with stakeholders.
Europe’s biggest carmaker said on Thursday it would gradually cut models by up to half in the coming years as it focuses on more attractive market segments.
Production capacity will be reduced to nine million vehicles per year, compared to a target of 12 million before the coronavirus pandemic.
“With our future plan, we are entering the next phase of change in our ways,” Volkswagen CEO Oliver Blume said in a statement.
“We are making the Volkswagen Group faster, stronger and more competitive,” he added.
The update followed a major rift within the group’s board of directors on Thursday and comes after reports that the company is considering closing four German factories and implementing job cuts of up to 100,000.
The mass layoff plan, which would represent the biggest change in the company’s nearly 90-year history, is fiercely opposed by German lawmakers and powerful unions.
The auto giant had already put in place plans to cut jobs and launch a major production challenge, trying to combat pressure from US sales to intensifying competition from Chinese automakers.
Volkswagen employees participated in an information event and demonstration organized by IG Metall in front of the VW factory in Zwickau.
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The latest reported layoffs, will double the previously announced 50,000 job cuts and are now said to include the closure of four German plants: Hanover, Zwickau, Emden and the Audi plant in Neckarsulm. These plans were first reported by Manager Magazin late last month.
Analysts at Jefferies said on Thursday that Volkswagen’s rescue plan had provided “limited new information” and “no indication of progress” on a deal being reached on plant closures, a five-year investment plan or job cuts of up to 100,000.
‘The Perfect Storm’
Volkswagen’s General Works Council and German industrial union IG Metall have pledged to push back against the reported layoffs and plant shutdowns. A protest organized by IG Metall took place on Thursday outside the Volkswagen factory in the German city of Zwickau.
Volkswagen shares were last seen trading 0.6% higher on Friday morning. The stock, which recently traded at levels not seen since the summer of 2010, is down more than 30% so far this year.
“If you look at the stock price, it tells you a story,” Henning Gebhardt, partner and fund manager at HollyHedge Consult, told CNBC’s “Europe Early Edition” on Friday.
“Volkswagen is in a complete storm: The competition from Chinese competitors is very high so there is no real profit from China, you have taxes, you have other competitors who have a good offer, which Volkswagen currently does not have, and simply speaking, the car industry is under pressure,” said Gebhardt.
