Volkswagen is considering cutting up to 100,000 jobs worldwide, apart from closing four German plants, in what would be the most radical overhaul in the European carmaker’s 89-year history.
Members of Volkswagen’s supervisory board have been briefed on the plans, due to be discussed at a board meeting on July 9. The proposed closures at Hanover, Zwickau, and Emden, along with Audi’s Neckarsulm site, would put more than 45,000 jobs at risk, on top of 50,000 cuts already agreed with unions in late 2024. The brutal layoff of 100,000 people, along with the shutdown of four assembly plants, will be the largest restructuring in the automotive industry’s history, according to people familiar with the matter and a report by Manager Magazin.
The shake-up will be as massive as the one conducted by General Motors (GM) during its 2009 bankruptcy and in the early 1990s, when the American automaker cut as many as 74,000 jobs and shut or idled 21 plants.
CEO Oliver Blume presented the plans to senior executives this week as he tries to align management behind cuts likely to face fierce resistance from unions and the state of Lower Saxony, Volkswagen’s second-largest shareholder. Blume and Chief Financial Officer Arno Antlitz are also said to be planning a broader restructuring, including spinning off the core VW brand and parts operations into separate entities.
Blume and Chief Financial Officer Arno Antlitz are reportedly aiming to fundamentally restructure the 89-year-old German giant, including spinning off the core VW brand and parts operations into separate entities, Manager Magazin added. The overhaul would also see planned investment cut by around 15%, to just over 130 billion euro (USD 148 billion), over the next five years.
Volkswagen’s works council and Germany’s IG Metall union vowed to resist any such measures, saying in a joint statement, “Should such plans go ahead, we would do everything in our power to prevent them.”
By the end of the 2025 financial year, the group’s overall headcount stood at 667,164, with almost 43% based in Germany. Blume’s overhaul-related plans will go against Volkswagen’s unique governance and ownership structure, which gives significant influence to labor union representatives. In 2024, when Blume wanted to close plants in Germany, he faced fierce resistance from labor unions that forced him to make a retreat.
While the management, back then, had the idea of shutting or selling several sites as part of a sweeping cost-cutting drive to tackle overcapacity and weak demand in its electric vehicle vertical, IG Metall and the works council conducted massive strikes in a prolonged standoff with the automaker’s management.
The pressure on Volkswagen stems largely from China, where non-Chinese automakers’ market share fell to 32% in 2025 from 57% in 2020, according to AlixPartners. Volkswagen, once China’s top-selling automaker, was overtaken by BYD in 2024 and slipped to third place last year. Premium rivals including BMW have also flagged weaker China sales.
Volkswagen shares have fallen more than 25% so far in 2026. Apart from tough Chinese competition, the carmaker is also tackling stiff tariffs on car imports into the United States as well as dwindling demand in Europe, which, as per the company, has made its business model unsustainable.
According to the management consulting firm AlixPartners, non-Chinese automakers’ market share in the world’s largest automobile market fell to 32% in 2025 from 57% in 2020. Having been China’s top automaker for years, Volkswagen got knocked into second place by BYD in 2024. In 2025, the automaker got relegated to third place. To make things worse, Chinese automakers are also expanding into emerging markets, apart from growing rapidly on Volkswagen’s home turf in Europe.
BYD, Chery, SAIC, and Leapmotor doubled their combined European market share through May from a year ago, according to ACEA (European Automobile Manufacturers’ Association).
As per Germany’s Bild newspaper, Volkswagen is also planning to end its automated driving tie-up with auto supplier Bosch to cut costs and boost its competitiveness. The partnership was launched in 2022 with Volkswagen’s software unit Cariad to develop software for driver assistance and autonomous driving across the automaker’s brands.
Citing sources, Bild said the project had not met expectations after around 1.5 billion euro (USD 1.71 billion) had been invested in it.
“Internal assessments found the technology was not yet competitive. The Bosch tie-up is scheduled to be ended in accordance with the terms of the contract, and a final termination would not occur before Monday (29th June),” the newspaper added further.
“Volkswagen plans to source hardware and software for such systems from a new partner. A replacement is currently being chosen, with a contract planned by September,” Bild added further.
The automaker, pursuing its aggressive cost-cutting further, has agreed to sell its diesel engine unit, Everllence, to Bain Capital in a leveraged deal (in which a company is acquired largely with borrowed money), generating proceeds of about 7.4 billion euro (USD 8.4 billion).
“Leaner structures and processes will give Everllence the opportunity to achieve further growth in attractive markets such as data centers, the energy sector, and shipping. At the same time, it will allow us to focus even more strongly on our core business,” Blume said while announcing the move.
Bain, in the medium term, will remain Everllence’s major shareholder with a 49% stake, which, in the coming years, will rise to 51%. The venture was competing against CVC and EQT in the bidding race, the latter of which was part of a consortium with Porsche SE and Qatar. It is worth mentioning that Porsche holds 53.3% of voting rights in Volkswagen, followed by the Gulf country (17% through its sovereign wealth fund).
Everllence, formerly known as MAN Energy Solutions, makes diesel engines for the shipping industry. The company has plans to cash in on the ongoing AI boom by meeting demand for generators to power data centers. As part of the deal with Bain, the company’s sites in Augsburg, Oberhausen, Berlin, Hamburg, and Ravensburg will be retained under the new ownership structure at least until the end of 2030.
Image Credit: Volkswagen Group