Volkswagen AG is contemplating a monumental restructuring strategy, potentially resulting in the layoff of up to 100,000 employees and the shutdown of four German factories, according to sources familiar with the matter reported by Reuters.
This proposed plan is set to be discussed during a Supervisory Board meeting on July 9. If approved, it would mark the largest restructuring effort in the history of the automotive industry, as highlighted by News.ro.
Reports indicate that Volkswagen is considering closing plants located in Hanover, Zwickau, Emden, and the Audi facility in Neckarsulm. These closures could jeopardize over 45,000 jobs, in addition to approximately 50,000 positions already targeted by existing workforce reduction programs.
CEO Oliver Blume presented this plan to company managers this week, seeking their support for measures deemed crucial amid the challenges facing the automaker.
Concerns Surrounding Volkswagen’s Restructuring Plan
Volkswagen is grappling with intense competition from Chinese manufacturers, tariffs imposed by the United States on vehicle imports, and declining demand for cars in Europe. The company previously warned that its current business model has become unsustainable under these circumstances.
Manager Magazin reported that the restructuring plan could also involve reducing investments by about 15%, bringing the total to a little over €130 billion over the next five years. Additionally, management is considering the division of the Volkswagen brand and its component division into separate entities.
Investor reactions to the restructuring news have been cautious, with Volkswagen shares dropping by 3.4% on Friday, reaching their lowest level in 16 years.
The IG Metall union, the employee council, and the government of Lower Saxony, the second-largest shareholder in the company, have announced their firm opposition to the factory closures and mass layoffs.
Employee Reactions
Employee representatives issued a joint statement, saying, “If such plans move forward, we will do everything in our power to prevent them.”
The Premier of Lower Saxony also stated that the state would not support such a restructuring effort.
Blume had previously attempted to close factories in Germany in 2024 but faced strong union opposition and had to abandon the plan. However, the company’s situation has worsened since then.
Volkswagen has rapidly lost ground in the Chinese market, where it was once a leader. In 2024, it was surpassed by BYD and fell to third place in 2025. Meanwhile, Chinese manufacturers such as BYD, Chery, SAIC, and Leapmotor are aggressively expanding their presence in Europe, doubling their market share in the initial months of the year.
As of the end of the 2025 fiscal year, the Volkswagen group employed approximately 667,000 people worldwide, with nearly 43% based in Germany. If the plan is approved, this restructuring could surpass the significant reorganizations undertaken by General Motors before and during its 2009 bankruptcy, becoming one of the largest in automotive history.
