The new reform plan is the largest restructuring in Volkswagen's 89-year history and includes exploring alternatives for four German factories where existing models will be discontinued over the next decade.
The plan also averts a major conflict with unions, shelving plans for an extraordinary shareholder meeting. Previously, management had considered convening a shareholder meeting to force forward the reform plan if it was blocked by workers and the Lower Saxony state government, Volkswagen's second-largest shareholder.
The new agreement will simplify Volkswagen Group's structure and limit the influence of the group's supervisory board on key decisions. The unions and the state of Lower Saxony hold a majority on the supervisory board.
"This is a strong signal for the future of the Volkswagen Group. We are taking responsibility for all our employees, our partners and industrial jobs around the world," CEO Oliver Blume said in a statement.
Affected by this news, Volkswagen's stock price closed up 7.9%. The market was relieved as the situation could have escalated into an unprecedented crisis for Europe's largest carmaker, sources said.
German auto industry analyst Ferdinand Dudenhoeffer said discussions will take place over the next 10 months over the future of Volkswagen's plants in Emden, Zwickau, Neckarsulm and Hannover. These four factories are all facing a phased suspension of production of specific models starting in 2031.
A confidential internal document of Volkswagen recently disclosed and reported by Germany's "Bild" shows that there is also a huge difference in the production costs of factories in Germany and those of overseas factories. Compare the Emden plant with production sites in Palmela, Portugal, and Tianjin. The results show that according to internal calculations, the ex-factory cost of a single vehicle at the Emden factory is 4,850 euros; the Palmela factory is 2,385 euros; and the Tianjin factory is only 1,078 euros. In other words, the cost of the Emden factory is more than twice that of the Portuguese factory, and more than four times that of the Chinese factory.
This follows weeks of intense negotiations between Volkswagen's board of directors and major shareholder Porsche Holding, unions and the Lower Saxony state government. The final agreement no longer mentioned the idea of spinning off Volkswagen's passenger car and parts business.
The "Future Plan" comes at a time when Volkswagen is facing pressure from all sides: it is affected by U.S. import tariffs and is trapped by the weakness of the Chinese market. China was once a "cash cow" for the group and the world's largest auto market.
Volkswagen said it needed "further fundamental adjustments to the size of its global workforce", which would include cutting around 50,000 more jobs worldwide, half of which would be in Germany, the governor of Lower Saxony said on Friday (September 4).
The company did not provide further details on the timetable for the layoffs or how they would be distributed across brands and regions.
However, a confidential document reported by Bild a day ago stated that under the current plan, about 70,000 jobs are already facing abolition - 50,000 in Germany and 20,000 overseas. On this basis, the new "2030 Austerity Plan" targets an additional 47,000 jobs. In addition, management has retained the option of further cutting 13,000 positions in order to further reduce costs.
At the same time, calls in Germany for the introduction of policies to support the automobile industry are getting louder and louder. When encountering similar problems in the past, German people generally believe that it is best for the political circles not to interfere in matters involving the economic sector. According to a report by German TV, polls show that most people in Germany currently agree with the government to assist the economic sector, and most people also support limiting electric vehicle subsidies to cars produced in Europe.
