The TL;DR
Volkswagen has confirmed it will cut its model range by half and cut production capacity by nine million cars a year, as it battles the worst crisis in its history. But the official announcement made no mention of jobs, with sources saying CEO Oliver Blume wants to cut up to 100,000 jobs and close four German plants. The plan sparked union protests and a board of directors clash on July 9, opening what looked like a long and bitter war.
Volkswagen has announced plans to increase its range of widespread products as it battles the worst crisis in its history. The automaker will cut its model range in half in the coming years, CNBC reports.
The group will also reduce production capacity to nine million vehicles per year. That’s less than the 12 million it targeted before the pandemic.
Volkswagen currently offers 150 model lines across brands including Porsche, Audi, and Skoda. The so-called offering complexity, meaning the number of devices and configuration options, will be reduced by up to 75%.
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CEO Oliver Blume launched the program as a survival measure. It’s about “making the Volkswagen Group faster, stronger and more competitive,” he said.
A number no one could say out loud
What the official announcement left out were jobs. The company did not say anything about the census at its board of directors’ meeting, although that is a prominent point that dominates the story.
Sources say Blume wants to cut up to 100,000 jobs and close four German plants. That would almost double the reductions Volkswagen has already reportedly planned.
Areas said to be at risk are Hanover, Emden, Zwickau, and Audi’s Neckarsulm factory. None of this was confirmed on the record at the board meeting.
Why Volkswagen is in trouble
Stress comes from several places at the same time. Volkswagen faces high costs and excess capacity at home, increased Chinese competition, and US import costs.
That force has been brutal on the bottom line. The company’s profit margins nearly halved between 2021 and 2025.
China is a very sharp wound, as the market that once printed money for German products is turning hostile. Domestic Chinese rivals now dominate, leaving foreign automakers scrambling for a comeback.
Volkswagen isn’t the only one feeling it, with BMW cutting its profit forecast as China squeezes Europe. The electric transition has added to the difficulty, and Volkswagen has already cut EV output as demand falters.
Fighting with workers
The plan came into direct conflict with the powerful Volkswagen unions on July 9. Workers’ representatives on the board of directors are pushing back hard at deep cuts.
Around 400 people demonstrated in Wolfsburg, which is part of a wider IG Metall rally in all 20 group locations. The union warned of “major conflict” if the management forces the plans to be implemented.
IG Metall president Christiane Benner, who is also vice chairman of the board of directors, was not specific. “This is a clear message to the board: not on our watch,” he said.
The workers have momentum and precedent on their side. Under Blume’s latest restructuring deal through 2024, unions won a commitment to avoid closing German plants, and reopening that promise is on fire.
What happens next
The meeting never resolved anything. Instead it reads like the opening round of a long and painful discussion about the future of Volkswagen.
Analysts were not impressed with the information provided, which Jefferies called “limited new information”. List reductions are now recorded, but human costs are deliberately left blank.
Despite the layoffs, Volkswagen is still using the technology it hopes will save it, having become Rivian’s largest shareholder through a software partnership. The strategy is to reduce the old business while buying a leaner, software-defined future.
That space is the whole story. Volkswagen told the world how many cars they would stop making, but refused to say how many people would stop renting.
