Volkswagen Labour Representatives Block Restructuring Plan

Volkswagen's labour representatives on the supervisory board blocked a sweeping restructuring plan at a meeting on Thursday, Reuters reported on Friday, citing company sources.

This comes as Europe's largest carmaker wrestles with falling profits, rising costs and competition. Volkswagen said on Friday that its global vehicle deliveries fell 8.6% year on year in the second quarter, a steeper decline than in the previous quarter.

The company's share price was down by 0.6% around noon in Europe. The focus, however, remained on the restructuring proposals that divided the supervisory board.

As the board met at Volkswagen’s headquarters in Wolfsburg on Thursday, IG Metall, one of Germany’s largest trade unions, organised coordinated protests across the country to stop a plan that reportedly includes up to 100,000 job cuts worldwide — more than 15% of its workforce — and closing four plants in Germany: Volkswagen factories in Hanover, Emden and Zwickau, as well as Audi's Neckarsulm plant.

According to Reuters, citing unnamed company sources, these measures were rejected by the supervisory board on Thursday, which includes labour representatives and representatives of the state of Lower Saxony. The committee voted against management's proposed restructuring by 12 to seven, after opposition from labour representatives.

Volkswagen ⁠made no mention of possible job cuts or plant closures late on Thursday. Instead, after the meeting, Volkswagen unveiled its strategy through to 2030, including plans to halve the number of models it offers and reduce the number of vehicle variants by as much as 75% in an effort to cut costs and complexity, measures that did not require the approval of the supervisory board.

Volkswagen said it would reduce annual production capacity to around 9 million vehicles to respond to “sharply intensified competition”. That compares with capacity of around 12 million vehicles before the Covid-19 pandemic and about 10 million today.

Other measures include tailoring products and technology more closely to regional markets, aligning production capacity to match demand, and simplifying the group’s corporate structure and investment portfolio.

Volkswagen chief executive Oliver Blume said in a video statement that “the global situation has deteriorated over the past 12 months”, pointing to geopolitical tensions, tariffs, high costs, increasing regulation and intensifying global competition.

He also said Volkswagen needed to “get rid of excess capacity”, leaving open the possibility of factory closures in the longer term. Blume added that “digitalisation, artificial intelligence and shared services will help increase productivity and speed”.

Arno Antlitz, Volkswagen Group’s chief financial officer, said the cost reductions already agreed were “not sufficient in the current economic and geopolitical environment”.

He said the company planned to improve vehicle cost structures, “significantly reduce overhead costs”, increase plant efficiency and accelerate technology development and decision-making.

Volkswagen employs about 657,000 people worldwide, but the company has not said how the planned reduction in production capacity would affect its workforce. According to Reuters, Volkswagen's works council has demanded clarification on management's cost-cutting plans by the end of Friday.

The group has repeatedly argued that deeper restructuring is necessary after its net profit fell 28% to €1.56bn while revenue declined 2.5% year on year to €75.7bn in the quarter to March 2026.

“The next few years will decide who will play a decisive role in the automotive industry in the future,” Blume said.