AUTONEWS

The China effect: Volkswagen considers cutting 100,000 jobs and closing four German plants
Volkswagen is considering cutting 100,000 jobs and potentially closing some of its German factories, German media reported on Friday, following the release of the automaker's restructuring plan.
Volkswagen, one of the world’s largest automakers, is reportedly planning to axe as many as 100,000 jobs over the next few years, representing 15% of its global workforce.
The job cuts would come alongside the planned closure of four factories in Germany and a 15% reduction in investment over the next five years, according to a report Friday by Manager Magazin, a German business magazine.
The report added that Volkswagen – Germany’s biggest automaker and one of its major employers – is planning to spin off its main Volkswagen brand and auto parts business into separate entities. The company owns several other brands including Audi and Porsche.
A Volkswagen spokesperson declined to comment to CNN on “internal, confidential documents.”
“The underlying matters will be discussed and approved in the respective committees,” the spokesperson added. “We will not pre-empt this process.”
VW employs almost 660,000 people worldwide and had already announced plans to slash 50,000 jobs in Germany by 2030.
Like many European carmakers, it has been squeezed by fresh tariffs on its exports to the United States as well as struggling to counter the rise of Chinese electric vehicles manufacturers, including BYD.
The Volkswagen spokesperson said the company required “sharper focus as well as stricter discipline over costs and investment” to meet its new reality, adding that its traditional business model – making cars in Europe and exporting them globally – “no longer works” for all of its brands.
Any job cuts will likely meet resistance from German unions. “If such plans are pushed forward, we would prevent them with all our might,” labor union IG Metall and Volkswagen’s General Works Council said in a joint statement on Friday.
If implemented, this plan would result in a workforce reduction of approximately 15%—what *Manager Magazin* describes as the most profound and sweeping restructuring in the company's history. The announced restructuring aims to help Volkswagen compete with Chinese automakers, which have captured a significant share of the European automotive market in recent years.
According to CNBC, plants in Hannover, Zwickau, and Emden, as well as the Audi facility in Neckarsulm, are at risk of closure—despite a 2024 agreement reached with unions that ruled out factory closures and forced layoffs in Germany until the end of 2030. The plans would also entail a roughly 15% reduction in investment, bringing the total to just over €130 billion over the next five years.
So far, according to *The Guardian*, company management has not commented on reports regarding these job cuts and production overhauls; a spokesperson stated only that Volkswagen would not "pre-empt the process" of restructuring, while acknowledging the shift occurring in the automotive sector.
"It is true that the entire automotive industry and the Volkswagen Group are undergoing a profound transformation. Executive management has repeatedly stated that our current business model—developing cars in Germany, producing them in Europe, and exporting them globally—no longer works for all brands. The world has changed fundamentally in recent years," a company spokesperson said. With a workforce of around 650,000 spread across its various brands—including Audi, Škoda, Bentley, SEAT, and Cupra—the German automotive giant has faced challenges in transitioning from combustion engines to vehicle electrification, a rapidly growing sector increasingly dominated by the Chinese automotive industry.
VW-Porsche...2023 was Porsche's best year for sales, with 320,221 cars delivered to customers worldwide. However, much has changed since then. A sharp decline in China, driven by rising local competition, weighed heavily on results. Additionally, the discontinuation of the Macan and 718 models in Europe—after they failed to meet the latest cybersecurity regulations—also impacted sales performance.
In 2025, deliveries fell to 279,449 units, effectively returning to 2020 levels. The outlook for 2026 is no better: demand dropped 15% in the first quarter, to 60,991 cars. Faced with this new reality, Porsche is considering reducing production capacity to better align with weaker demand. Even so, CEO Michael Leiters remains confident that the company can generate higher profits despite lower volumes. The goal is to prioritize stronger margins on current and future products, even if it comes at the expense of total sales volume.
In an interview with the German newspaper *Frankfurter Allgemeine Zeitung* (FAZ), the executive made his stance clear: "Porsche needs to make money even with fewer cars." Despite plans to cut annual production, the model lineup is set to expand—including the return of the 718 sports cars: "We want to keep attracting new customers to the brand." He did not provide specifics, but it is widely understood that the Boxster and Cayman will be offered with both internal combustion engines and fully electric powertrains.
Uncertainty surrounds the SUV positioned above the Cayenne...The *FAZ* reports that the future of a large, three-row SUV—previously announced and positioned above the Cayenne—is currently uncertain. Codenamed K1, the model was initially planned as a fully electric vehicle before Porsche went back to the drawing board to incorporate internal combustion engines. For now, headquarters in Zuffenhausen reportedly has not yet decided whether to move forward with the flagship SUV.
Elsewhere in the lineup, a new performance model positioned above the 911 could still happen. In March, Porsche told Motor1 that a hypercar is being evaluated alongside a new grand touring model, but the future of both depends on customer feedback. Updates on how the lineup will evolve are expected in the second half of the year. We should also learn more about the new compact crossover destined to replace the first-generation Macan, production of which ends this half of the year.
Porsche also aims to strengthen ties with Audi to cut costs, which—according to the FAZ, citing Leiters—have "spiraled out of control" in recent years. The CEO declined to comment on rumors suggesting further workforce reductions of between 2,000 and 4,000 employees. However, he did say that a new cost-cutting program is expected to be finalized before the traditional summer break in July.
Key reasons...Volkswagen plans to cut up to 100,000 jobs worldwide and close factories due to fierce competition from Chinese automakers (such as BYD and Geely), declining European demand, and slowing sales in China. The automaker aims to cut costs and reduce production capacity in the face of margin pressure.
The company's historic restructuring involves the following pillars:
-Chinese competition: Chinese automakers are gaining ground in Europe with electric vehicles that are cheaper, more efficient, and high-tech.
-Declining profits: The company has faced a sharp drop in operating and net profits over recent quarters.
-Overcapacity: VW is reducing its global annual production capacity to align with market realities, while also limiting labor benefits and streamlining its portfolio of platforms and models.
-German crisis and costs: Production costs in Germany and Europe are significantly high, impacting the competitiveness of the brand's exports.