Volkswagen plans to cut 100,000 jobs worldwide amid industrial crisis

German car giant Volkswagen is set to shed around 100,000 jobs worldwide after management and unions agreed to cut a further 50,000 positions by the end of the decade, the company has said. The reductions would amount to roughly one in seven of its global workforce.

Volkswagen, like much of German industry, is facing a severe financial and operational crisis, having watched profit margins collapse. CEO Oliver Blume has cited the loss of Russian energy as a key factor, along with increased competition from China.

The scale of the restructuring marks a dramatic retreat for a company long regarded as a symbol of German industrial strength. Volkswagen already had around 50,000 job cuts underway at its namesake brand, Audi, Porsche, and software subsidiary CARIAD, mostly through voluntary departures and early retirement. The latest plan effectively doubles that figure.

If carried out in full, the loss of around 100,000 positions would be the largest workforce reduction ever undertaken by a global automaker. Volkswagen employs roughly 650,000 people worldwide.

The cuts go far beyond payroll. Volkswagen has acknowledged that its European factories have capacity to build more than 500,000 vehicles a year beyond current demand, while the future of plants in Hanover, Emden, Zwickau, and Neckarsulm is uncertain once their existing model programs end between 2031 and 2034. No competitive replacement models have yet been secured for the four sites.

The company is also shrinking its ambitions elsewhere. Its model range is set to be cut by as much as half, while investment and research spending for 2027-2031 has been capped at €135 billion ($157 billion). Volkswagen is restructuring around annual sales of roughly 9 million vehicles and is targeting a 9% operating margin by 2030.

Hit by US tariffs and patchy demand for electric cars, Europe’s largest carmaker is struggling on several fronts. The crisis has been compounded at home by soaring energy costs since Berlin abandoned cheap Russian pipeline gas following the escalation of the Ukraine conflict in 2022, increasingly relying on costlier LNG imports, including supplies from the US.

Hit by US tariffs and patchy demand for electric cars, Europe’s largest carmaker is struggling on several fronts. The crisis has been compounded at home by soaring energy costs since Berlin abandoned cheap Russian pipeline gas following the escalation of the Ukraine conflict in 2022, increasingly relying on costlier LNG imports, including supplies from the US.

Russian presidential investment envoy Kirill Dmitriev has linked Germany’s industrial decline directly to its break with Russian energy. “No Russian gas – no German industry,” he wrote on Friday, commenting on plans by steel giant ArcelorMittal to shut major operations in Duisburg, affecting around 550 of the site’s 800 workers.

The energy shock has eroded a competitive advantage that underpinned German manufacturing for decades. The country subsequently suffered two consecutive years of economic contraction followed by sluggish growth, with manufacturers cutting production, investment, and jobs.

At the same time, Volkswagen has been losing ground in China, once its most important market, to domestic rivals such as BYD and Geely. Chinese automakers have also expanded rapidly in Europe, putting additional pressure on Volkswagen as it struggles to make its electric vehicles competitive on price and cost.

Volkswagen has steadily scaled back production at home. Last December, it ended vehicle production at its Dresden plant – the first time in the company’s nine-decade history that it had stopped carmaking at a German factory. BASF, Bosch, Continental, and other major German manufacturers have also closed or downsized facilities in recent years.