Volkswagen chief executive Oliver Blume has secured stakeholder backing for his turnaround plan, but the German carmaker now faces difficult negotiations over job cuts and plant closures, alongside unresolved questions about its strategy in the United States.
Volkswagen’s supervisory board is due to meet on Friday, with decisions still pending on restructuring details and the company’s US operations. The world’s No. 2 carmaker has lost billions of euros because of tariffs, adding pressure to a strategy that is being reassessed. One unresolved issue is whether premium brand Audi should have its own US production site, a move that would require approval from the supervisory board committee.
Volkswagen also plans to shift towards the most profitable parts of the US market, including pick-up trucks and large SUVs. The company is simultaneously reducing its operations in China, where its workforce has already fallen from 90,000 to 70,000 as it responds to declining sales. Further reductions are expected, while Chinese production is facing capacity cuts of 500,000 vehicles.
Germany remains the most politically and industrially sensitive part of the restructuring. Of 50,000 additional job cuts planned by Volkswagen, about half are expected to take place in Germany. The company has already agreed to a first wave of 35,000 German job reductions under a 2024 labour agreement that provided employment guarantees until the end of the decade and promised investment in plants now facing possible closure.
Germany’s largest industrial union, IG Metall, is currently bound by a strike truce with Volkswagen until January 1, 2027, limiting its immediate ability to use industrial action. Instead, union representatives are expected to meet management on September 30 to discuss concerns that the latest restructuring could breach the 2024 labour agreement.
Although labour representatives dropped their opposition to the broad restructuring plan at a board meeting three weeks ago, they and the state of Lower Saxony, Volkswagen’s second-largest shareholder, continue to oppose further local job losses. Unions want the proposed 25,000 German job cuts to serve as the starting point for negotiations rather than a fixed numerical target, arguing for discussions centred on reducing costs instead.
Several German plants are already facing a defined timetable for closure. Volkswagen plans to remove more than 500,000 vehicles of production capacity in response to persistently weak demand. The Emden, Zwickau, Hanover and Neckarsulm plants are scheduled to close on a staggered basis between 2031 and 2034.
The company is expected to produce a European production plan by the end of June 2027, making the period before that deadline important for factories whose futures remain uncertain. Possible alternatives include converting plants for defence production or developing partnerships with Chinese companies, although no concrete plans have emerged.
Working hours could provide another area for negotiation. The 2024 labour agreement allows the parties to agree to a four-day working week if Volkswagen faces financial difficulties, offering another potential mechanism as management and labour representatives negotiate the next stage of the restructuring.
