TL; DR
Volkswagen has confirmed it will halve its model range and cut production capacity to nine million cars a year as it battles the worst crisis in its history. But the official announcement made no mention of jobs, even though sources said CEO Oliver Blume wants to cut up to 100,000 jobs and close four German plants. The plan led to union protests and a supervisory board clash on July 9, and what looked like a long and bitter battle.
Volkswagen has announced plans to scale back its expanding product range as it grapples with the worst crisis in its history. The carmaker will reduce its model range by half in the coming years. CNBC reported on this.
The group will also reduce production capacity to nine million vehicles per year. That’s well below the 12 million it once targeted before the pandemic.
Volkswagen currently offers around 150 model lines across brands including Porsche, Audi and Skoda. Offering complexity, meaning the number of hardware and configuration options, will be reduced by up to 75%.
Chief executive Oliver Blume described the overhaul as a survival move. It’s about “making the Volkswagen Group faster, more sustainable and more competitive.”
A number that no one will say out loud
The main focus of the official announcement was the jobs. At the supervisory board meeting, the company did not say anything about the number of employees, although this is the dominant flashpoint in the story.
Sources say Blume wants to cut up to 100,000 jobs and close four German plants. That would nearly double Volkswagen’s cut already planned.
The sites reported to be at risk are Hannover, Emden, Zwickau and Audi’s Neckarsulm factory. None of what was mentioned was confirmed at the meeting of the Board of Directors.
Why Volkswagen is in trouble
The pressure comes from several directions at the same time. Volkswagen faces high costs and overcapacity at home, growing Chinese competition and US import tariffs.
These forces have been brutal to the bottom line. The company’s profit margin has nearly halved between 2021 and 2025.
China is creating the sharpest, as the market that once printed money for German brands is turning hostile. Local Chinese competitors are already dominant and leaving foreign automakers are trying to make a comeback.
Volkswagen is not alone in feeling this way BMW lowers profit forecast As China squeezes Europe. The electric switch added to the tension and Volkswagen already did cut EV production as demand fell.
Struggle with the workforce
The plan clashed with Volkswagen’s powerful union on July 9. Labor representatives on the supervisory board have pushed back hard against deeper cuts.
Around 400 people demonstrated in Wolfsburg, part of a wider mobilization of IG Metall at around 20 group locations. The union warned of a “major conflict” if management pushed through the plans.
Christian Benner, the president of IG Metall, who is also the vice-chairman of the supervisory board, spoke openly. “It’s a clear message to the council: it’s not in our control,” he said.
Workers have influence and precedent on their side. Under Blume’s late 2024 restructuring deal, unions won a commitment to avoid closing German plants, and the reopening of that promise is explosive.
What will happen next?
The meeting was never likely to resolve anything. Instead, it reads like the opening phase of long and bitter negotiations over Volkswagen’s future.
Analysts were unimpressed by the details offered, with Jefferies calling it “limited new information”. A reduction in ranks has already been recorded, but the human cost has been deliberately left blank.
Even as it cuts, Volkswagen is still spending money on the technology it hopes will save it becomes the largest shareholder of Rivia through software partnerships. The strategy is to shrink the legacy business while transforming it into a leaner, software-defined future.
This gap is the whole story. Volkswagen has revealed to the world how many cars it will stop making, while refusing to say how many people it will stop hiring.
