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Volkswagen’s supervisory board backed a sweeping overhaul that calls for 50,000 additional job cuts, far fewer models and a smaller industrial footprint, giving chief executive officer Oliver Blume his clearest mandate yet to remake Europe’s biggest carmaker.

The plan doubles workforce reductions agreed to across Volkswagen Group brands since late 2024, while also paving the way for the company to slim its vehicle line-up by as much as 50 per cent by 2035. The 50,000 new cuts represent about 8 per cent of VW’s global workforce as of the end of last year.

“Given intensifying global competition, shifting demand and technological change in the automotive industry, a consistent alignment of workforce capacity with economic reality is essential,” the company said in a statement. The board approved the comprehensive restructuring effort, known as the Future Plan, at a meeting in Wolfsburg, Germany.

VW’s works council, which represents the company’s employees, sought to temper the potential for job losses, saying the 50,000 figure is a planning assumption derived from Volkswagen’s target to achieve a 9 per cent margin by 2030 rather than a fixed headcount goal. A spokesman for the labour group also said that compulsory layoffs at Volkswagen remain ruled out through the end of 2030 under existing agreements.

That distinction reflects the broader compromise behind the unanimous board vote, reached a day earlier than initially expected after weeks of increasingly bitter rhetoric. Labour representatives had accepted that Volkswagen needed further cost reductions. But they fiercely opposed plant closures, moves to weaken co-determination – Germany’s system of worker representation in corporate decisions – and plans to separate parts of the core VW business.

VW’s US depositary receipts jumped about 9 per cent in New York on Thursday, the most since March 2023.

In the final package, Blume won backing for the extra job cuts and sweeping efficiency measures. Workers secured assurances that no factory would be immediately abandoned and that contentious site decisions would instead be worked through over the coming months. The agreement gives the CEO stronger backing to push ahead as VW struggles with high costs, weak demand and intensifying competition, particularly from Chinese carmakers.

The deal stops short of immediately closing factories. VW acknowledged that it currently has about 500,000 vehicles-worth of excess annual capacity in Europe. The company said its factories in Emden, Hannover, Neckarsulm and Zwickau currently lack competitive future production plans once existing models phase out between 2031 and 2034. Alternative uses for the plants will now be explored, Volkswagen said.

That gave labour-friendly board members room to support the overhaul without abandoning core red lines. IG Metall chief Christiane Benner and works council head Daniela Cavallo said the compromise had “prevented a dangerous escalation”, while stressing that no plant closing had been agreed upon and that plans to separate the VW passenger-car and components businesses were off the table.

“The work is only just beginning,” the labour chiefs said of the restructuring plan. “What we will continue never to accept, however, is the burden being placed one-sidedly on employees.” Benner said the carmaker was dealing with a “crisis situation”.

The Porsche-Piëch family, which controls a majority of VW’s voting rights through Porsche SE, has pushed for faster action as returns and dividend flows come under pressure. Blume has argued that Volkswagen can no longer afford to carry the same sprawling cost base and industrial footprint while funding investments in electric vehicles, batteries and software.

Porsche SE “welcomes this decision and intends to continue to support the transformation efforts of the board of management of its core investment, Volkswagen AG,” a spokesperson for Porsche SE said in a statement.

The overhaul targets an operating margin of 9 per cent by 2030 on annual sales of about 9 million vehicles. VW is also planning €135 billion of capital expenditure and research and development spending over 2027 through 2031, the company said.

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Source: Read the original article on www.smh.com.au

Additional coverage from www.theguardian.com:

Under-pressure carmaker will shed 15% of workforce and halve its product line in sector’s biggest ever restructure

The car company Volkswagen has approved controversial plans to shed 100,000 jobs in a battle for survival as it faces fierce competition from Chinese rivals.

After the latest round of talks this week, the company announced a further 50,000 job cuts and agreed a staggered end to current production at four German plants: Emden, Zwickau, Hanover and the Audi site in Neckarsulm between 2031 to 2034. There are no specific plans beyond that.

The agreement came as a surprise after a meeting of shareholders, unions, and state representatives on the supervisory board in what was seen as a considerable test for the German carmaker’s chief executive, Oliver Blume.

He had gone as far as to arrange an emergency meeting if the package was rejected in preparation for a potential showdown with unions.
“This is a strong signal for the future,” said Blume, who now has a mandate for what the company previously called the “most strategically profound transformation programme” in the history of the VW group.

He was booed last month by staff during a tour of the company’s headquarters in Wolfsburg, northern Germany, as part of a dialogue about the need to address the company’s financial challenges.

IG Metall, the company’s biggest staff union and representative on the supervisory board, said concessions had been made on both sides to avert “a dangerous escalation of the conflict”.

Chief among these was a stay of execution for four plants threatened with closure in exchange for an agreement on staff reductions. The deal includes a sweeping cost-cutting plan to cut a further 50,000 positions by 2030, bringing the total job losses in the pipeline to 100,000.

“Concrete solutions must now be developed for all locations … we expect the board to now do its homework based on the compromise reached and deliver results promptly,” said Christiane Benner, the first chair of IG Metall, and Daniela Cavallo , the chair of the General and Group Works Councils of VW.

Blume said the company would be investing “a three-figure billion sum” in the next few years “to make our iconic brands even more attractive, stronger and more competitive”.

The supervisory board acknowledged that there was over capacity in Europe to produce 500,000 vehicles for which there was no market.

Plans to turn a plant in Osnabrück into a defence factory were abandoned this year after objections from Qatari investors.

The number of car models VW group produces, which includes the Bentley and Audi brands, will be slashed by half. “It is essential to systematically align workforce levels with economic realities,” VW said.

The total of 100,000 cuts will be the largest restructuring ever carried out in the global automotive industry and amounts to about 15% of the carmaker’s employees.

Volkswagen employs more than 650,000 people across all its brands, which also includes Skoda, Seat, Porsche, Cupra and Lamborghini.