Volkswagen is reportedly preparing one of the biggest restructuring exercises in its history, with plans that could see up to 100,000 jobs eliminated worldwide and four manufacturing plants in Germany shut as the automaker struggles to cope with mounting competition from Chinese electric vehicle manufacturers and a rapidly changing global automobile market.
According to reports, the German auto giant’s management is working on an extensive cost-cutting strategy aimed at restoring profitability after a sharp decline in earnings over the past two years. The proposal, which is expected to be discussed by the company’s supervisory board, would significantly expand an earlier restructuring programme that had already targeted thousands of job reductions. While Volkswagen has not officially confirmed the reported figures, it acknowledged that its traditional business model is no longer sustainable in its current form and that sweeping changes are required across the group.
The company is facing pressure on multiple fronts. Once the dominant foreign carmaker in China, Volkswagen has steadily lost market share as domestic manufacturers, particularly electric vehicle makers, have introduced technologically advanced and more affordable models. Companies such as BYD have rapidly expanded, intensifying competition in what remains the world’s largest automobile market. Although Volkswagen has recently managed to regain some ground in China, executives believe much deeper reforms are necessary to remain competitive.
Besides growing competition from China, the company is also dealing with slowing demand in several markets, increasing trade barriers, rising production costs and the expensive transition from conventional petrol and diesel vehicles to electric mobility. These challenges have forced the automaker to reassess its long-established strategy of designing and manufacturing vehicles in Germany for export around the world.
Reports suggest that factories in Hanover, Zwickau and Emden, along with Audi’s Neckarsulm plant, could face closure if the restructuring plan moves ahead. Together, these facilities employ more than 45,000 people and manufacture a range of electric vehicles, vans and premium Audi models. Any shutdowns are expected to face stiff resistance from labour unions, which have already warned that they will oppose compulsory layoffs and factory closures. Existing labour agreements also provide significant employment protections for workers until the end of the decade.
Volkswagen’s proposed overhaul forms part of a broader transformation underway across the European automotive industry, where manufacturers are battling shrinking profit margins, accelerating electrification and fierce competition from Chinese rivals. The company hopes the restructuring will generate billions of euros in savings over the coming years, allowing it to invest more effectively in future technologies and restore long-term competitiveness in an increasingly challenging global market.
