Just a year and a half ago, Volkswagen reached an agreement with the unions to lay off “only” 35,000 employees to ensure the continuity of some factories, ensuring their operation until 2030. a bad drinkbut acceptable in order to preserve the employment of many other Volkswagen employees. Today the German group has announced that this pact it’s broken. The numbers don’t work.
The German magazine Manager Magazine advanced that the group’s CEO, Oliver Blume, had presented a new adjustment plan to the board of directors. The number of layoffs is the highest that the German manufacturer has ever announced: up to 100,000 layoffs worldwide, and four factories in Germany with closure on the table.
The size of the problem. Volkswagen closed 2025 with more than 662,000 employees all over the world. Losing 100,000 jobs means losing almost one in six workers. As and as highlighted the agency EFEthis is the largest restructuring in the group’s 89-year history.
The plants designated for closure are those in Hannover, Zwickau and Emden, all three of the Volkswagen brand, plus the Audi factory in Neckarsulm. The plan also includes a 15% reduction in investments for the next five years and a general spending cut of 11 billion euros before the end of the decade.
The accounts don’t add up. The numbers for the first quarter of 2026 explain this drastic move by Volkswagen. Operating profit fell by 14% year-on-year to 2.5 billion euroswith a margin of 3.3%, while sales fell 7%. Analysts expected almost 4,000 million in operating profit.
Chief Financial Officer Arno Antlitz left no room for doubt in the seriousness of the situation in the results report for the first quarter of the year: “We must radically transform our business model and achieve structural and sustainable improvements.” The group has already reduced around 29,000 positions from 2023 and cut its production capacity from 12 to 9 million vehicles per year. For management, these measures are not enough to compensate for the drop in sales.
Chinese pressure and tariffs. There are two sources of pressure that have accelerated the deterioration of Volkswagen’s situation. The first and most obvious are the Chinese manufacturers. In 2025, cars made in China reached 7% of sales in the EUexceeding one million units for the first time. At the same time, European exports to China plummeted by 43%. Volkswagen, which has one of its largest markets in China, has been losing share there for years due to the unstoppable push of local Chinese brands.
The second key factor comes from the opposite extreme: the United States. The tariffs that Trump has imposed on European vehicles have hit hard a group that has most of its factories in countries affected by the tariffs. Blume he recognized it at last week’s general meeting of shareholders: “Never before has the risk situation been so high.” To gain liquidity, the German manufacturer has just closed the sale of 51% of its Everllence marine engine division to Bain Capital for 7.4 billion euros. This could be just one more of future asset sales to obtain more liquidity.
The union wall. As might be expected, the plan has not been well received by unions. The late 2024 agreement with IG Metall promised that there would be no factory closures or forced layoffs in Germany until at least 2030. The new plan blows up those commitments.
Daniela Cavallo, president of the Volkswagen works council, and Christiane Benner, head of IG Metall, reacted with a joint statement of frontal rejection of the announced layoffs: “If these plans go ahead, we will stop them with all our forces.” On July 9, the supervisory board of the Volkswagen group will debate this workforce adjustment plan, which would affect one in every six of the company’s employees. The decisions made at that meeting will decide the future of Volkswagen.
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