Volkswagen approves its tough restructuring plan against all odds: 100,000 jobs cut and half of its product lineup eliminated
Contrary to all expectations, Volkswagen Group’s management has received approval from the Supervisory Board to implement a drastic restructuring plan. The agreement was reached after the board committed to exploring alternative uses for all German plants (Emden, Zwickau, Hannover, and Neckarsulm) whose future was uncertain.
As part of the new cost-cutting strategy, 50,000 jobs will be eliminated, in addition to the 50,000 previously agreed upon. In total, the German giant will reduce its workforce by 100,000 employees in the coming years, a move that will also affect management positions. The vast majority of these cuts will take place in Germany.
Investments will also be optimized, so only shares in businesses that hold strategic importance and are profitable will be retained. Volkswagen plans to divest approximately one-third of its stock portfolio, though no specific companies have been identified as being affected. Its holdings in Bugatti or Gotion could be targeted for sale.
As previously reported, the new plan also includes reducing its global model lineup by 50% by 2035. Additionally, the complexity of its product offerings will be reduced by 75%, resulting in a significantly simplified lineup that will help the conglomerate become more efficient, following the example of Asian automakers.
Volkswagen Aims for 9% Operating Margin by 2030
The production capacity will be adjusted to support annual sales of around 9 million vehicles, in line with the figures achieved by the group last year. The overcapacity in Europe is estimated at around 500,000 units. In the North American market, Volkswagen will focus on more profitable segments, with its new Scout brand playing a key role in this effort, while in China it will strengthen exports to other markets to offset declining domestic demand.
A simplified leadership structure will also be implemented to enhance the group’s agility, which is crucial in an environment where more and more manufacturers aim to match the speed of Chinese groups. Management has set a goal of achieving an operating margin of 9% by 2030, a significant increase from 2.8% in 2025. This will ensure the sustainability of the business.
The company’s released statement makes no mention of the hypothetical disappearance of the Spanish brand SEAT, a measure that was included in an internal document leaked by German media just a few days ago. In any case, if such a decision were to be made, it would likely be announced in due time by SEAT S.A., the parent company of both SEAT and CUPRA.
"The Supervisory Board has unanimously approved the Executive Board’s Future Plan presented today. This represents a clear signal for the future of Volkswagen Group. We take responsibility together with all our employees, our partners, and industrial jobs around the world. In the coming years, we will invest in the tens of billions of dollars to make our iconic brands even more attractive, strong, and competitive," said Oliver Blume, CEO of Volkswagen Group.
Source | Motor.es