German automobile giant Volkswagen’s supervisory board on Thursday approved a transformation plan pitched by the CEO, Oliver Blume, that will include cutting another 50,000 jobs, on top of the 50,000 reduction already under way, in its attempt to counter painful tariffs, production overcapacity, and intense Chinese competition.
The venture also targets an operating margin of 9% by 2030, up from 3.8% in the first six months of 2026. The H1 ratio was way down from 7.9% in 2022, Volkswagen’s peak over the last decade.
The restructuring plan, called the most extensive in Volkswagen’s 89-year history, also explores alternatives for four German plants that will eventually run out of models during the next decade.
The development also averted a major clash between the management and worker unions by putting the scenario of an extraordinary general meeting on the backseat.
The automaker was reportedly mulling the scenario to push through its restructuring plans against workers and Volkswagen’s second-largest shareholder, Lower Saxony.
“The agreement … is a positive sign for Volkswagen and the capital market—even if it involves severe cutbacks among the workforce and within the group,” said Moritz Kronenberger of Volkswagen shareholder Union Investment.
“The ball is now entirely in the Executive Board’s court. There are no more excuses,” he added further when asked about the program’s implementation.
The latest deal will simplify Volkswagen’s conglomerate structure and limit the influence of the group’s supervisory board, which is dominated by unions and Lower Saxony, on key decisions.
“This is a strong signal for the future of the Volkswagen Group. We are taking responsibility for our entire workforce, for our partners and for industrial jobs worldwide,” Blume said in a statement.
However, the next 10 months might witness intense discussions over the future of Volkswagen’s plants in Emden, Zwickau, Neckarsulm, and Hannover, all of which face a staggered phase-out from 2031 onward.
In the lead-up to the deal, there were tense negotiations that pitted the board and majority owner Porsche SE against unions and Lower Saxony, with the idea of a spinoff of Volkswagen’s passenger car and components businesses no longer being mentioned.
Now, the next stage of the negotiations between the Volkswagen management and its workers will revolve around the crucial details of the job cut program, including its implementation.
The workers, in 2024, agreed to a turnaround package that provided job security for most of Volkswagen’s German operations until 2030.
Deutsche Bank analysts said that while the new deal doesn’t solve all of Volkswagen’s challenges, “it removes one of the biggest investor concerns: whether the company is still capable of making the difficult decisions required to address them.”
The year 2026 has been more than a testing one for the German automotive giant, facing multiple headwinds all at once, be it Trump tariffs or the weak Chinese market. The group’s cash cow was once the world’s biggest car market.
Among the plans mentioned in the deal, Volkswagen will also be exploring the idea of introducing new SUVs and pickups for the North American market.
“The brand will explore opportunities in the highly popular body-on-frame B-segment, including robust SUVs and pickup trucks, as a potential component of Volkswagen’s future product portfolio,” the company said in a media release.
The B-segment traditionally describes smaller vehicles. While the automaker didn’t provide additional details on the size of its potential SUVs or trucks, it is pinning its hope on the segment to unlock its fortunes in the US market, where its current share, as per Motor Intelligence, stands at 3%.
Volkswagen will also be looking to expand its hybrid offerings for US customers.
“We will focus on those segments that show the strongest market demand and best meet the needs of customers and dealers in the region,” the company remarked, while noting the overall soaring hybrid sales numbers recently in North America.
Company veteran Marco Schubert will now lead Volkswagen’s North American strategy.