FRANKFURT, Germany- Volkswagen has approved a major restructuring plan that will see the German carmaker cut about 50,000 additional jobs, as it seeks to reduce costs and respond to intensifying competition from Chinese automakers.
The company’s supervisory board approved the plan on Thursday, September 3, as part of a wider transformation aimed at improving Volkswagen’s competitiveness in an increasingly difficult global car market.
The additional cuts could bring the total number of positions earmarked for reduction across the group to about 100,000 when combined with previously agreed reductions.
Volkswagen has been under pressure from several directions, including weaker demand in China, growing competition from Chinese manufacturers, high production costs in Germany and the expensive transition from conventional vehicles to electric cars.
The company has also been dealing with excess production capacity in Europe.
Volkswagen estimates that its European factories have capacity for more than 500,000 vehicles above current demand, prompting it to consider alternative uses for four German sites, Emden, Zwickau, Hanover and Neckarsulm.
The restructuring will also significantly reduce the number of models Volkswagen offers.
The company plans to halve its model range and cut product complexity by as much as 75 percent by 2035, concentrating resources on higher-volume and regionally tailored vehicles.
Pressure from China
One of Volkswagen’s biggest challenges is the changing automotive market in China, historically one of its most important markets.
Chinese manufacturers have rapidly expanded their electric and hybrid vehicle offerings, putting pressure on established European manufacturers.
Volkswagen’s first-half 2026 after-tax earnings fell by about 30%, with declining sales in China among the factors weighing on the company.
The company is therefore seeking to become more competitive while investing heavily in new technologies and products.
Volkswagen has previously said its transition requires significant investment in batteries, electric vehicles and other technologies.
At the same time, the company is seeking billions of euros in annual savings to offset higher costs and improve profitability.
Germany’s costly production base
The restructuring also reflects the high cost of producing vehicles in Germany.
Volkswagen’s management has argued that its overhead costs remain substantially higher than those of comparable competitors.
CEO Oliver Blume has said the company’s support-function costs are around 30% above comparable companies, with personnel costs accounting for a significant share.
The company has already agreed to reduce more than 35,000 positions at Volkswagen’s German operations by 2030, primarily through socially responsible measures such as voluntary departures and early retirement.
The latest plan goes further by targeting additional reductions across the wider organisation.
Four plants face uncertain futures
Volkswagen’s restructuring plan includes finding alternative uses for the four German sites rather than simply maintaining existing vehicle production.
The company has said it wants to develop new industrial solutions and seek partners or investors where vehicle manufacturing is no longer viable. Potential alternatives include activities outside traditional automobile production.
The move marks a significant shift for Volkswagen, whose German factories have long been central to its identity and workforce.
The company’s workforce reduction is also unfolding as the automotive industry undergoes a major technological transition.
Traditional combustion-engine vehicles are being replaced by electric models, requiring manufacturers to redirect investment while managing the different labour and production requirements of EV manufacturing.
Volkswagen targets higher profitability
Under its new Future Plan 2030, Volkswagen is targeting annual sales of about 9 million vehicles and an operating margin of 9% by 2030. Its operating margin was about 3.8% in the first half of 2026, according to Reuters.
The company also plans to invest about €135 billion ($157 billion) in capital expenditure and research and development between 2027 and 2031.
Volkswagen’s management says the restructuring is intended not simply to reduce its workforce but to create a leaner company capable of competing in a rapidly changing global market.
The announcement nevertheless represents one of the most significant restructurings in Volkswagen’s history, as Europe’s largest carmaker confronts the combined pressures of Chinese competition, weak demand, high European production costs, energy expenses and the costly shift towards electric vehicles.
