Volkswagen is considering shutting four German factories and ramping up job cuts to as many as 100,000, two people familiar with the matter said on Friday, in what could be the biggest ever overhaul in the industry.
Members of VW’s supervisory board have been informed of the plans, which are due to be discussed at a July 9 meeting, the people said.
The move comes as the carmaker faces mounting pressure from Chinese rivals, stiff tariffs on car imports into the United States, as well as dwindling demand in Europe, which the company has said makes its business model unsustainable.
Closing the plants at Hanover, Zwickau, Emden and Audi’s Neckarsulm site would put more than 45,000 jobs at risk, according to the people. That would add to the 50,000 cuts that are currently planned.
In absolute terms, laying off 100,000 people and axing four assembly plants would be the largest restructuring in automotive industry history.
It would be comparable to major shake-ups by GM leading up to and during its 2009 bankruptcy and in the early 1990s when it cut as many as 74,000 jobs over four years and shut or idled 21 plants.
Volkswagen CEO Oliver Blume presented the plans to senior executives earlier this week to rally support for deep cuts likely to face fierce resistance from unions and the state of Lower Saxony, the carmaker’s second-largest shareholder.
The overhaul was first reported by Manager Magazin, which also said the world’s No. 2 automaker would cut investment by about 15% to just over €130 billion ($148 billion) over the next five years.
Blume and Chief Financial Officer Arno Antlitz aim to fundamentally restructure the 89-year-old company, including spinning off the core VW brand and parts operations into separate entities, the magazine added, citing sources.
Volkswagen shares were trading at 16-year lows on Friday, down 3.4% at 1335 GMT, suggesting investors were sceptical the plan would succeed.
“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.”
‘Far-Reaching’ Change Needed, Says VW
A Volkswagen spokesperson declined to comment on “confidential documents.”
“The entire group, including its brands and subsidiaries, must undergo far-reaching change,” the spokesperson said.
VW’s works council and Germany’s powerful IG Metall union vowed to resist any such measures, saying in a joint statement on Friday: “Should such plans go ahead, we would do everything in our power to prevent them.”
The premier of Germany’s state of Lower Saxony said the state would not agree to the plan.
Porsche SE, the investment vehicle of the Porsche and Piech families and Volkswagen’s biggest shareholder, declined to comment. Volkswagen’s plans will likely put the spotlight on its unique governance and ownership structure that gives significant influence to labour representatives and Lower Saxony.
In its 2025 financial year, the group’s global workforce was 667,164, with almost 43% employed in Germany.
Blume’s first push to close plants in Germany in 2024 ran into fierce resistance from labour unions, forcing a retreat.
At the time, management had floated shutting or selling several sites as part of a sweeping cost-cutting drive to tackle overcapacity and weak EV demand, triggering strikes and a prolonged standoff with IG Metall and the works council, which hold significant sway over company decisions.
Massive Pressure From Rising Chinese Rivals
As market conditions have worsened, Blume is under even greater pressure to revive Volkswagen’s fortunes as it battles tariffs and growing competition from Chinese automakers, its biggest threat.
“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,” independent auto analyst Matthias Schmidt said. “The market reality is hitting the German giant hardest.”
Major automakers have steadily lost ground to locally produced EVs in China. According to AlixPartners, non-Chinese automakers’ market share fell to 32% in 2025 from 57% in 2020.
Having been China’s top automaker for years, Volkswagen was knocked into second place by BYD in 2024 and fell to third place in 2025.
That decline has now spread to premium automakers like BMW, which issued a shock profit warning last week blamed partly on weak sales in China.
Chinese automakers are also expanding into emerging markets and are growing rapidly on Volkswagen’s home turf in Europe.
BYD, Chery, SAIC and Leapmotor doubled their combined European market share through May from a year ago, according to ACEA.
Dozens more Chinese automakers have launched or plan to launch in Europe soon.
($1 = 0.8794 euros)
(Reporting by Thomas Seythal and Christina Amann, additional reporting by Kirsti Knolle and Christoph Steitz, Writing by Nick Carey; editing by Josephine Mason, Elaine Hardcastle and Louise Heavens)
