Volkswagen CEO Oliver Blume has confirmed plans to axe 50,000 jobs across its global operations as part of a sweeping restructuring drive. The move, which marks one of the largest layoffs in industry history, is aimed at reducing overheads and securing the company's long-term competitiveness in a fiercely competitive market.
The job cuts are driven by Volkswagen's internal benchmarking, which reveals that its overheads are 20% higher than those of comparable companies. With personnel costs accounting for half of these overheads, the company believes that eliminating approximately 50,000 positions worldwide would help to bring labour costs in line with industry standards.
Blume has reassured staff that the initial phase of workforce reduction, which began in 2024 and has already seen 37,000 jobs cut, is being handled in a 'socially responsible manner' through voluntary redundancy packages and partial retirement schemes. However, he stressed the need for a second phase of cuts to further reduce overheads.
The future of Volkswagen plants in Emden, Hanover, and Zwickau, as well as the Audi plant in Neckarsulm, remains uncertain, with production at these sites currently scheduled to end between 2031 and 2034. The company intends to scale back its annual car production from a pre-pandemic level of 12 million units to 9 million, which is expected to have a significant impact on the wider economy.
Blume highlighted the challenges posed by an oversaturated car market, particularly from Chinese and European competition. Volkswagen's decision to reduce production is a reflection of these changing market conditions, which are also driving its plans for alternative uses at some of its factories. Advanced discussions are underway regarding the transformation of the Osnabrück factory from automotive to defence production.
The company's restructuring drive has been met with criticism from staff unions, including IG Metall, which previously condemned proposals to close four German plants. The union's response to Blume's latest remarks is expected in due course.