Volkswagen Group is doing well with electric vehicle sales in its home region, but costly tariffs and eroding market share in China and North America have been hurting it badly. Europe’s largest automaker, which also owns brands including Audi, Porsche, Skoda, and Lamborghini, has seen its profit margins evaporate, and yesterday the company’s supervisory board was presented with a plan to ameliorate that. An expected call for factory closures and redundancies wasn’t included—at least not in VW Group’s public statement—but according to Reuters, the measure failed anyway in a 12-7 vote.
Unlike most automakers, worker unions are extremely powerful at the VW Group. Half of the 20 seats on the supervisory board are appointed by worker councils. Another two seats are spoken for thanks in part to the company’s partial ownership by the German state of Lower Saxony—currently held by that state’s minister of education and minister-president. So while profit has been important, it’s not the only thing that matters to the decision-makers.
Over the years, there have been lengthy fights over any suggestion of redundancies. Lately, VW Group and its unions spent months in negotiations in 2024 before finally agreeing to a plan to cut 35,000 jobs by 2030.
That number had scaled up to 50,000 by this March, as the extent of its problems continued to grow. Then, in late June, a German magazine reported that now, 100,000 jobs would go by 2030, along with the unthinkable: closing four German factories, something that has never been done in its history.
However, Volkswagen’s public statement on the restructuring plan makes no mention of job losses or factory closures—at least not directly.
But it does call for a heavily edited model lineup, with half as many vehicles offered across all its brands. These will be “concentrated on the most attractive market segments,” VW Group says, which probably means mostly crossovers, now as beloved by European car buyers as their counterparts in the US. To make things simpler for the factories, “offering complexity—for example, the number of available equipment options—will be reduced by up to 75 percent.”
The proposal also details a mismatch between global demand for VW Group products, at 9 million vehicles a year, and the company’s annual capacity to build 10 million vehicles a year (although it notes that VW has reduced its capacity by 2 million units since COVID).
So while the plan doesn’t explicitly say VW will cut jobs and shutter plants, it does involve building fewer cars with less differentiation to them, something that sounds like it’s less labor-intensive.
Or did. Assuming Reuters’ sources are correct, it’s time for Blume and his colleagues to think of something else.
