Volkswagen's Reform: Cumulative Layoffs Reach 100,000

2026-09-08

Recently, the Supervisory Board of Volkswagen Group unanimously approved a comprehensive reform plan named "Future Plan 2030". This is regarded as the largest and most strategically profound transformation since the Group's founding 89 years ago. The plan involves 50,000 additional layoffs and concerns the fate of four plants.

Financial Difficulties and Workforce Optimization

In 2025, Volkswagen Group's revenue of €321.9 billion was roughly flat year‑on‑year, but operating profit plummeted from €19.1 billion to €8.9 billion, a year‑on‑year drop of 54%. The operating margin was only 2.8%. Entering 2026, the situation has not improved.

Previously, Volkswagen had agreed with labour unions to cut approximately 50,000 positions. The new plan requires an additional 50,000 global job cuts, including management positions, bringing cumulative layoffs to 100,000. The Group currently employs about 650,000 people worldwide. The Group has made it clear that layoffs will be carried out in a gentle manner, primarily through voluntary departures, attrition, and job integration. It is reported that over 37,000 employees have already signed severance agreements. The Group has also reached a wage settlement agreement valid until 2030, which, under the collective bargaining system, will reduce labour costs by €1.5 billion annually.

Production Suspension Risks and Product Streamlining

Volkswagen's Reform: Cumulative Layoffs Reach 100,000

Overcapacity in the European market exceeds 500,000 vehicles. Volkswagen plans to reduce global annual production capacity from 10 million to 9 million vehicles. Domestic German production capacity will be cut by 734,000 vehicles annually. Specifically, the main plant in Wolfsburg will reduce production lines from 4 to 2, while Zwickau and Emden will each cut one line. Notably, the Dresden "Transparent Factory" was officially closed at the end of 2025, marking the first closure of a complete vehicle plant in Germany in Volkswagen's 88‑year history. Furthermore, based on current production schedules, the plants in Emden, Zwickau, Hanover, and Audi's Neckarsulm plant cannot guarantee new production quotas between 2031 and 2034 respectively.

By 2035, the number of global vehicle models sold under the Group's ten brands will be cut by about 50%. The compression of model derivatives and optional equipment packages will reach 75%. Volkswagen explained that the model portfolio has become too complex over the past decades, with many products overlapping in positioning, dispersing R&D resources and making it difficult to achieve economies of scale. After streamlining, the remaining models will increase production volume per model, reducing per‑vehicle costs through scale effects.

Goals and Outlook

Volkswagen has set core financial targets for 2030: annual sales of 9 million vehicles, an operating margin of 9%, operating profit of approximately €31 billion, and administrative expenses controlled at €37 billion. Capital expenditure and R&D investment for 2027–2031 are targeted at €135 billion. The investment portfolio will also be streamlined by about one‑third, retaining only assets that bring clear strategic value to the core business.

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