Volkswagen Group cuts 100k jobs, 50% of models and plans to build Chinese cars

Around 100,000 jobs within the Volkswagen Group are set to be cut worldwide, with as many as 50,000 of those losses planned by 2030 in Germany alone – according to the chief executive, Oliver Blume.

The Volkswagen Group’s executive board also announced last week that it is set to reduce its model variant count by 50 per cent and complexity within those vehicles by 75 per cent to cut costs. Cars such as the Porsche Taycan Sport Turismo and Volkswagen Golf-based Jetta have been axed from certain markets, while Audi has killed off the A1 supermini and Q2 already. 

Perhaps the most contentious part of this plan is a further reduction in global production capacity, with a new target of nine million units per year by 2030, down from a post-Covid figure of 12 million units. VW Group's plants in Germany are currently operating at around three quarters of their capacity. The country’s automotive workers unions hold incredible amounts of power, making any factory closures a difficult and costly process, and a politically problematic one for public officials involved. 

There’s been no final confirmation of which plants will bear the brunt of these cuts, but the chief executive said the Group has been unable to "find alternative uses" for four plants - Zwickau, Emden, Hanover and Neckarsulm – which are viewed as expensive to run. 

According to a report from German publication Handelsblatt, Volkswagen is also looking into producing its Chinese models, such as the ID. ERA 9X, in Europe to increase profitability of some of those plants.

Speaking to Auto Express at the Volkswagen ID. Polo’s Martorell factory in Spain in June, CEO Blume spoke about potential plans to combine with Chinese partners in Europe. “We, as a Volkswagen Group, have unique opportunities with our China footprint to bring them to Europe, but only in segments,” he said.

Blume added that another step could be to “partner with one of our [Chinese] partners. We are working together in China, but there are no talks, no ideas because we are focusing first on other industries and on our own product. And it hasn't changed during the last weeks”.

As for saving money so far this year, Blume explained: “We achieved a cost reduction of over one billion compared to last year. And that's a result of their agreements we made two years ago.

“Then we are making good progress in adapting the number of employees. We decided to reduce in Germany 50,000, and alone in Volkswagen, where we left 18,000 at the end term of this year.” 

As for the VW Group’s model range, the brand has already spoken about a “realignment to sustainably strengthen its competitiveness”, which will see the cancellation of many current models and future development programmes from across the business, allowing for investment and resources to be focused on the core products that the company says will “more acutely benefit the customer”. 

The plan also includes an even more intensive harmonisation of the group’s development programmes, further reducing the number of different platforms, electronic architectures and software landscapes. 

By reducing complexity, VW says it will avoid parallel development programmes, but market diversity will remain, as it will retain two branches of its future development programmes split between the western and eastern hemispheres. 

The group says these decisions are being forced upon it by intensifying challenges across global markets, driven largely by extra costs for its American business due to tariffs, as well as heightened competition from new-age Chinese brands and unstable geopolitics. 

In 2023, CEO of the Volkswagen brand, Thomas Schaffer, famously said that VW’s roof was on fire, but after years of consolidation and a new product wave later confirmed to Auto Express that while the fire was still smoldering, the worst was past. Now, though, with problems extending beyond VW into other brands, that fire might have been reignited. 

Did you know you can sell your car through Auto Express? We’ll help you get a great price and find a great deal on a new car, too.