Volkswagen rescue plan: Auto giant to cut model lineup and capacity
Cars are parked in fron of the Zwickau Volkswagen Plant on July 9, 2026 at the Zwickau, eastern Germany.
Jens Schluter | Afp | Getty Images
Volkswagen‘s management plans to drastically reduce its model lineup and further cut capacity, although the German auto giant stopped short of announcing any job cuts following tense stakeholder talks.
Europe’s largest automaker on Thursday said the model lineup will be gradually cut by up to half over the coming years as it concentrates on the most attractive market segments.
Production capacity, meanwhile, will be reduced to nine million vehicles per year, compared to a goal of 12 million before the coronavirus pandemic.
“With our future plan, we are moving into the next phase of transformation by our own means,” Volkswagen CEO Oliver Blume said in a statement.
“We are making the Volkswagen Group faster, more resilient and more competitive,” he added.
The update followed a high-stakes boardroom showdown with the group’s supervisory board on Thursday and comes after reports that the company is weighing up shutting four German factories and implementing as many as 100,000 job cuts.
The mass layoff plan, which would represent the most radical overhaul in the firm’s nearly 90-year history, is staunchly opposed by German lawmakers and powerful labor unions.
The auto giant had already laid out plans to implement sweeping job cuts and launched a major product offensive, seeking to counter pressures ranging from U.S. import tariffs to intensifying competition from Chinese car brands.
Volkswagen employees are taking part in an information and protest event organized by IG Metall in front of the VW plant in Zwickau.
Picture Alliance | Picture Alliance | Getty Images
The latest reported layoffs, however, would be double the 50,000 job cuts previously announced and now purportedly include the closure of four German plants: Hanover, Zwickau, Emden, and the Audi facility in Neckarsulm. The plans were first reported by Manager Magazin late last month.
Analysts at Jefferies said on Thursday that Volkswagen’s rescue plan provided “limited new information” and “no indication of progress” toward an agreement having been reached on either plant closure, a five-year investment plan or additional headcount reduction up to 100,000.
‘A perfect storm’
Volkswagen’s General Works Council and German industrial union IG Metall have pledged to push back against the reported job cuts and plant closures. A protest organized by IG Metall took place on Thursday outside Volkswagen’s plant in the German city of Zwickau.
Shares of Volkswagen were last seen trading 0.6% higher on Friday morning. The stock, which has recently been trading at levels not seen since the summer of 2010, is down more than 30% so far this year.
“If you look at the stock price, it tells you a story,” Henning Gebhardt, partner and fund manager at HollyHedge Consult, told CNBC’s “Europe Early Edition” on Friday.
“Volkswagen is in a perfect storm: Competition from Chinese competitors is very high so there’s no real profit from China, you have tariffs, you have other competitors which are actually having a nice offering, which Volkswagen at the moment doesn’t have, and then generally speaking, the auto industry is under pressure,” Gebhardt said.
