Volkswagen is considering closing four factories in Germany and increasing planned job cuts to as many as 1,00,000 (1 lakh) in what could become the biggest restructuring in the company’s history as the automaker grapples with fierce Chinese competition, US tariffs and weakening demand in Europe, Reuters reported, citing two people familiar with the matter.Members of Volkswagen’s supervisory board have been informed of the proposals, which are expected to be discussed at a July 9 meeting, according to Reuters.The proposed closures include Volkswagen’s plants at Hanover, Zwickau and Emden, along with Audi’s Neckarsulm facility. More than 45,000 jobs could be affected, adding to around 50,000 layoffs already planned.If implemented, the overhaul would rank among the largest restructuring exercises in automotive industry history.
Four plant closures under consideration
Volkswagen Chief Executive Oliver Blume presented the proposals to senior executives earlier this week to rally support for deep cost cuts that are expected to face strong opposition from labour unions and Lower Saxony, the company’s second-largest shareholder, Reuters reported.German publication Manager Magazin, which first reported the plans, also said Volkswagen intends to reduce planned investments by around 15% to just over 130 billion euros over the next five years.The report added that Blume and Chief Financial Officer Arno Antlitz are also exploring a broader restructuring, including spinning off the core Volkswagen brand and parts operations into separate entities.Volkswagen shares fell 3.4% on Friday to their lowest level in 16 years, suggesting investors remain sceptical about the proposed turnaround.
Weak sales, not just high costs
“The high costs are merely a symptom, not the cause. They do not address the root cause, which is weak sales,” Ingo Speich of Volkswagen shareholder Deka told Reuters. “VW must bring attractive products to market that are in high demand; that would put an end to the debate over costs.”A Volkswagen spokesperson declined to comment on what the company described as “confidential documents” but acknowledged the need for sweeping changes.“The entire group, including its brands and subsidiaries, must undergo far-reaching change,” the spokesperson told Rueters.Volkswagen’s works council and Germany’s powerful IG Metall union vowed to oppose the proposals.“Should such plans go ahead, we would do everything in our power to prevent them,” they said in a joint statement.The premier of Germany’s Lower Saxony state also said the state would not support the restructuring plan.
China competition, tariffs add pressure
Volkswagen employed 667,164 people globally in 2025, with nearly 43% of its workforce based in Germany.Reuters reported that Blume’s earlier attempt to shut German plants in 2024 was abandoned after strong resistance from labour unions.Pressure on Europe’s largest automaker has intensified as Chinese manufacturers continue to gain market share while US tariffs add to cost pressures.According to AlixPartners, non-Chinese automakers’ share of China’s passenger vehicle market fell to 32% in 2025 from 57% in 2020.Volkswagen, once China’s largest automaker, lost the top spot to BYD in 2024 and slipped to third place behind Geely in 2025. BYD, Chery, SAIC and Leapmotor doubled their combined European market share through May from a year ago, according to ACEA.
‘Market reality is hitting VW hardest’
Independent automotive analyst Matthias Schmidt said Volkswagen is now paying the price for delaying structural reforms.“The VW Group has suffered from years of neglect in readjusting workforce numbers due to the stranglehold the regional government and trade unions have on the company,” Schmidt told Reuters. “The market reality is hitting the German giant hardest.”
