Volkswagen to cut 50,000 more jobs amid tariffs and Chinese competition

Volkswagen's supervisory board approved a far-reaching transformation plan on Thursday that will see another 50,000 jobs cut as the company tries to cope with steep tariffs, excess production capacity and increasingly aggressive Chinese competitors. It marks the most extensive restructuring in the automaker's 89-year history.

The plan involves exploring alternative futures for four German plants that are expected to gradually run out of models to build over the coming decade. Industry analyst Ferdinand Dudenhoeffer said negotiations over the fate of the Emden, Zwickau, Neckarsulm and Hannover plants would continue over the next ten months, with a staggered phase-out beginning in 2031.

Clash with unions avoided

The agreement sidesteps a major confrontation with labour unions, since management shelved the option of calling an extraordinary general meeting — a step it had considered to push the plan through against the wishes of workers and Lower Saxony, Volkswagen's second-largest shareholder. The deal will also simplify Volkswagen's group structure and reduce the influence of the supervisory board, where unions and Lower Saxony hold a majority, over key decisions.

CEO Oliver Blume said the plan sent a strong signal for the group's future, stressing that the company was taking responsibility for its entire workforce, its partners and industrial jobs worldwide.

Investors reacted positively: Volkswagen shares listed in Frankfurt closed 7.9% higher after the announcement, reflecting relief that a potential full-blown crisis at Europe's largest carmaker had been averted.

The agreement came after weeks of tense talks that pitted the supervisory board and top shareholder Porsche SE against unions and Lower Saxony. A previously floated idea of spinning off Volkswagen's passenger car and components divisions was no longer part of the discussion. Dudenhoeffer described the outcome as a kind of ceasefire rather than lasting peace, but said it would allow attention to shift back to business matters.

Volkswagen said further adjustment of its global workforce capacity was necessary, amounting to roughly 50,000 job cuts worldwide — on top of a previously announced reduction of 50,000 positions already underway. The company gave no further details on timing or how the cuts would be spread across its brands and regions.