Volkswagen supervisory board approves management’s restructuring plan

Surprisingly, the Volkswagen supervisory board has approved the management board's restructuring plan early. According to Volkswagen, the vote was unanimous - partly because a decision on potentially spinning off the core Volkswagen brand has been deferred, removing some of the immediate pressure for now.

According to several news agencies, a compromise unexpectedly emerged at Volkswagen’s supervisory board meeting on Thursday evening. The executive committee had met beforehand, followed by the full supervisory board, whose meeting had originally been scheduled for 4 September. The meeting was seen as pivotal in determining whether CEO Oliver Blume could push through his “Future Plan” and whether this would result in a rift between the management and supervisory boards.

Few had expected the unity now demonstrated. Volkswagen said the management and supervisory boards agreed that implementing the Future Plan was essential to maintaining the competitiveness of the Volkswagen Group and securing it sustainably for the future. According to insiders, the reason the supervisory board met earlier than planned was that a possible way out emerged during Thursday’s executive committee meeting.

It was apparently helpful that a decision on spinning off the core Volkswagen brand could be postponed. “Above all, the state of Lower Saxony, which owns 20 per cent of Volkswagen and has extensive veto rights under the Volkswagen Act, had opposed spinning off the brand,” Handelsblatt reported.

In a statement issued by Volkswagen following the meeting, CEO Oliver Blume said: “The supervisory board has unanimously approved the Future Plan presented by the Group management board today. This is a strong signal for the future of the Volkswagen Group. We are taking responsibility for our entire team, our partners and industrial jobs worldwide. In the coming years, we will invest a three-digit billion-euro sum to make our iconic brands even more attractive, stronger and more competitive.”

Employee representatives take a moderate stance

IG Metall and the Group works council have not added fuel to the fire in their initial response. They stressed that the decision had prevented an escalation. At the same time, they said the management board now had to do its homework. “The confrontational approach and communication by the management board in recent weeks were not constructive,” said IG Metall chief Christiane Benner and works council chair Daniela Cavallo in a joint statement. However, Benner and Cavallo said that the spin-off of the core brand was now off the table and that the attack on Germany’s co-determination structures had therefore been successfully fended off. They added that “no plant has been abandoned, and contrary to several media reports, no plant closure has been finalised. Instead, concrete solutions must now be developed for all sites – and we continue to see the management board as having a clear responsibility.”

Lower Saxony Minister-President Olaf Lies (SPD), who is also a member of the supervisory board, said: “Today’s decision sends important signals: we are investing heavily in future viability and improving competitiveness. At the same time, we will develop long-term prospects for our sites.”

Four Volkswagen plants at risk

By way of background, Volkswagen CEO Blume believes the company can only survive if it undergoes a fundamental restructuring. Details of his plans became public in June: Manager Magazin reported at the time that Blume and his management board were pursuing a much more radical restructuring course than previously known, citing a management presentation entitled “Group Target Picture” for 2030. Among other things, it set out plans to end production at four German plants. The global workforce is also to be reduced by 100,000 positions. Spiegel subsequently reported that Blume apparently plans to end production at the Zwickau and Emden plants in 2031, followed by the Hanover plant in 2032 and Audi’s Neckarsulm plant in 2034.

The Future Plan was presented to the supervisory board in July. However, media reports said Blume initially failed to win approval for his proposal in a first vote, prompting many industry observers to fear months of wrangling. As it now turns out, those fears were unfounded. Blume and his management board have now managed to convince the supervisory board, two months later. Insiders have consistently described the CEO as “determined” to push ahead with his restructuring plan. Following his initial setback, Handelsblatt reported that he wanted to implement the strategy “in stages now – if necessary, even against opposition from employees and the state of Lower Saxony”.

Importantly, Blume told Bild am Sonntag a few weeks ago that his Future Plan also included alternatives to closing plants. “There are more intelligent solutions than closing plants,” he was quoted as saying. He said the cost-cutting programme already being pursued at German production sites was having an effect: “We managed to improve our factory costs in Germany by an average of 20 per cent last year alone. That’s significant progress.” Blume did not provide further details. One possibility would be for Volkswagen to bring partners into the plants or repurpose them in another way.

Search for “alternative uses”

Volkswagen’s latest statement on the agreement between the company’s governing bodies says: “With its decision, the supervisory board has acknowledged that there is production overcapacity of 500,000 vehicles in Europe within the Volkswagen Group and that, for the Emden, Zwickau, Hanover and Neckarsulm plants, competitive follow-on production cannot currently be guaranteed from 2031 to 2034 onwards. Alternative uses for these plants are being examined in parallel and as a supplement.”

The four plants were already identified as problem cases at a supervisory board meeting in April, citing their high costs. The management board wants Emden, Zwickau, Hanover and Neckarsulm each to continue producing only their current model generation. More than 40,000 people work at the four sites, which have a combined annual production capacity of around 750,000 vehicles.

Zwickau and Emden are dedicated electric vehicle plants. Employees in Zwickau produce the VW ID.3, ID.4 and ID.5, as well as the Cupra Born and Audi Q4 e-tron. The Emden plant produces the VW ID.4, ID.7 and ID.7 Tourer. In both cities, Volkswagen has already reduced production from two lines to one, with two shifts each, to cut overcapacity.

Only the most attractive models – with fewer variants

Volkswagen’s Hanover plant is the headquarters of VW Commercial Vehicles and produces the all-electric ID. Buzz and ID. Buzz Cargo, as well as models from the T-series, including the Multivan. It also has a battery assembly operation. Audi’s Neckarsulm plant currently mainly produces combustion-engine and hybrid models. The Böllinger Höfe facility also builds the fully electric Audi e-tron GT sports car. Audi’s Brussels plant, meanwhile, was already closed in February 2025.

In general, the management board wants to focus only on the “most attractive vehicles”. Against this backdrop, the model range is to be reduced by around 50 per cent and product complexity by around 75 per cent by 2035. The selected models are intended to serve as design and technology flagships while also “benefiting from a focus on fewer variants”, according to the Group. The aim is higher volumes per model, lower costs and stronger economies of scale. Volkswagen also plans to align platforms, electronic architectures, driver assistance systems and software more consistently with the western and eastern hemispheres in future.