Volkswagen AG is confronting its sharpest test in nearly nine decades. The German automaker weighs cuts of as many as 100,000 positions worldwide and the closure of four domestic plants. Those steps would mark the largest restructuring in automotive history by headcount and factory count.
The proposals surfaced first in Manager Magazin and were confirmed by people familiar with internal talks. They would trim roughly 15 percent of the company’s global workforce of about 657,000. Capital spending would fall around 15 percent over the next five years. A supervisory board review is set for July 9.
Four sites sit in the crosshairs: Volkswagen plants in Hanover, Zwickau and Emden, plus Audi’s facility in Neckarsulm. Closing them would threaten more than 45,000 jobs on top of the 50,000 already targeted under a 2024 union pact. CEO Oliver Blume and CFO Arno Antlitz presented the outline to senior executives to build momentum ahead of the board session.
Volkswagen declined to comment on confidential documents. A spokesperson noted that the entire group, including brands and subsidiaries, must undergo far-reaching change. The current business model of developing cars in Germany, building them in Europe and exporting worldwide no longer works, the company has said.
Pressure from rivals and policy shifts intensifies the squeeze.
Weak sales in China, Volkswagen’s largest market, and aggressive competition from lower-cost electric-vehicle makers such as BYD drove a 28 percent drop in first-quarter 2026 profit. Non-Chinese automakers saw their share of the Chinese passenger-vehicle market fall to 32 percent in 2025 from 57 percent in 2020, according to AlixPartners data cited in Reuters reporting. BYD unseated Volkswagen as China’s top seller in 2024 before Volkswagen reclaimed the lead in early 2026 as subsidies faded.
U.S. tariff policy adds another layer. President Trump has threatened to raise duties on European cars and trucks to 25 percent, up from the 15 percent level agreed in a prior trade deal. The move targets imports while encouraging local assembly. Volkswagen already operates a plant in Chattanooga, Tennessee. BMW builds in South Carolina and Mercedes-Benz in Alabama. Higher barriers accelerate the logic of shifting more production stateside.
Energy costs and regulatory burdens compound the challenge inside Europe. German carmakers and other energy-intensive sectors cite elevated power prices and policy uncertainty as reasons domestic output has grown less competitive. Some steel and chemical producers have scaled back or redirected investment abroad. Reuters reported that Berlin’s government aims to prevent Volkswagen plant closures but acknowledges decisions rest with the company on commercial grounds.
Unions and Lower Saxony, which holds roughly 20 percent of the voting rights, have drawn a firm line. IG Metall and the works council stated they would do everything in their power to block closures. The state premier also signaled opposition. Blume’s earlier 2024 attempt to close plants triggered strikes and forced a retreat to a deal limiting compulsory redundancies.
Broader European manufacturing faces parallel strains. High labor and compliance costs, combined with subsidized Chinese output, have squeezed margins across autos, steel and chemicals. Chinese brands including BYD, Chery and SAIC doubled their combined European market share through May 2026 versus a year earlier, per ACEA figures reported by Reuters.
Executives point to a mix of cyclical softness and structural issues. Rapid EV adoption in China, Europe’s higher baseline costs and shifting global demand have eroded competitiveness for legacy players. Without adjustments, more capacity could migrate to regions offering lower operating expenses, stable energy and direct market access.
Volkswagen shares traded near 16-year lows after the reports surfaced. Analyst Ingo Speich of Deka told Reuters that high costs represent a symptom rather than the root cause. Weak sales require attractive products that meet demand, he said, rather than endless cost debates.
The July 9 board meeting will test whether the proposals advance or face dilution. Existing labor agreements and political influence make swift implementation uncertain. Yet the scale of the contemplated overhaul signals how far Volkswagen believes it must go to restore viability against global rivals.
Recent coverage in Reuters and The Guardian underscores the same pressures. German politicians continue to vow resistance even as economic reality darkens, Politico reported. The episode highlights difficult trade-offs for Europe’s industrial base as competition intensifies and capital flows toward locations with better cost, energy and market combinations.
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