- Volkswagen plans major restructuring amid weak demand and rising costs
- CEO Oliver Blume warns company faces a "more than critical" situation
- Up to 100,000 job cuts possible, mainly through voluntary departures
Volkswagen is preparing for a major restructuring as weak demand, high production costs, growing competition from Chinese automakers and global trade uncertainties put increasing pressure on the German carmaker.
Volkswagen CEO Oliver Blume has warned employees that the company is in a “more than critical” situation and needs significant cost reductions to remain competitive. The automaker has already agreed to cut around 50,000 jobs, while a further 50,000 positions could be affected under scenarios being considered, according to media reports.
Volkswagen has stressed that the potential figure of 100,000 job cuts has not been finalised. The company plans to reduce its workforce mainly through voluntary departures, early retirement and restrictions on new hiring.
Chinese Competition And Falling Demand
The automaker is facing intense competition from Chinese manufacturers, particularly in the electric vehicle market. Sales in China, one of Volkswagen's key markets, have also weakened as local EV makers continue to gain market share.
Weak demand across Europe has added to the pressure, with Volkswagen reportedly carrying excess production capacity of around 500,000 vehicles annually. Blume has said the company's costs are about 30% higher than those of some rivals, according to NDTV.
US tariffs, global economic uncertainty and the need for heavy investment in new technologies are further complicating Volkswagen's efforts to improve profitability.
Uncertainty Over German Plants
Volkswagen employees are also concerned about the future of several German facilities, with production at the Osnabrück plant expected to end next year.
More than 10,000 workers gathered in Wolfsburg, where Blume faced boos and criticism over potential job losses and the company's restructuring plans.
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Daniela Cavallo, chief of Volkswagen's works council, said trust in CEO Oliver Blume and the executive board had suffered severe damage, though she added that the relationship was not beyond repair.
Speaking to the gathering, she emphasised that the German manufacturing plants remain an integral part of the Volkswagen Group, according to Reuters.
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