Volkswagen is set to enter a significant restructuring phase following similar measures implemented earlier this summer, according to Reuters.
The warning comes directly from Volkswagen’s CEO, Oliver Blume, who informed employees in an internal document that “the situation is more than critical.”
The German automaker is considering eliminating approximately 50,000 positions worldwide and separating certain divisions. Blume clarified that this figure is not an official target, but rather an estimate based on necessary cost reductions to align more closely with competitors, highlighting the scale of the restructuring that may be required.
He noted that Volkswagen’s overall costs exceed those of comparable companies by more than 30%, while the current profit margin of under 4% is deemed insufficient to finance the development of new technologies and models, as well as maintain existing factories.
The company is facing pressures from multiple fronts, including increased competition from Chinese manufacturers in the European market, declining profits from operations in China, and import tariffs from the United States impacting its financial performance. Additionally, Volkswagen is grappling with a production capacity that exceeds demand in Europe.
Four German factories—Emden, Hannover, Zwickau, and Neckarsulm—are in particularly challenging positions. Blume indicated that these plants are not expected to reach competitive capacity utilization levels until the 2030s. However, he emphasized that no decisions regarding plant closures have been made as of now.
In July, Volkswagen announced plans to reduce the number of models offered and cut production capacity. The families controlling the group have intensified calls for more stringent measures.
The Volkswagen Supervisory Board is scheduled to meet on September 4 to continue discussions on the restructuring plan.
