Surprise deal, as VW board backs sweeping cuts in unanimous vote

Volkswagen plans to cut a further 50,000 jobs in the coming years as part of its cost-cutting package, the German carmaker said on Thursday evening after a unanimous vote at a meeting of the supervisory board.

VW described the reduction in global staffing capacity as necessary to meet the targets of its transformation programme, adding that the future of four German plants within the Volkswagen Group hangs in the balance.

No competitive future use can be guaranteed for the Emden, Zwickau, Hanover and Neckarsulm sites on a phased basis from 2031 to 2034. "Alternative uses are being examined in parallel and as a complementary measure" for these plants, the company said.

A concept for a sustainable and competitive production structure for the European plants that is compatible with the overall vision is to be developed by the end of June 2027. Options under discussion include using the plants temporarily for defence production and manufacturing Chinese VW models.

"The future plan creates the conditions to make the Volkswagen Group and its brands more capable, more competitive and more future-oriented," the company said in a statement. 

"The implementation of the future plan is, in the view of the management board and the supervisory board, absolutely necessary to maintain the competitiveness of the Volkswagen Group and to secure it sustainably for the future." 

After intensive and constructive deliberations, the supervisory board "unanimously approved" the comprehensive Future Plan 2030 of the Volkswagen Group. 

Chief executive Oliver Blume called the agreement "a strong signal for the future of the Volkswagen Group."

There will be no further supervisory board meeting on Friday, as originally scheduled, following the agreement, people familiar with the matter said.

IG Metall and group works council say escalation averted

In an initial reaction, IG Metall and the group works council stressed that an escalation had been averted. The management board must now do its homework, they said. 

"The confrontational approach and the communication of the management board in recent weeks was not constructive," IG Metall chairwoman Christiane Benner and works council chairwoman Daniela Cavallo said in a joint statement.

A spin-off of the core Volkswagen passenger car brand and VW components was off the table, Benner and Cavallo said, adding that the attack on co-determination structures had been successfully repelled. 

"No plant has been abandoned, and contrary to several media reports, no plant closure has been sealed," Benner and Cavallo said. "Rather, concrete solutions must now be developed for all sites - and we continue to hold the management board explicitly responsible for this."

Volkswagen is grappling with high costs and a difficult business environment. "The situation is more than critical," Blume said recently. The company is making a profit, but not enough to finance its future, he said. "We are oversized. That often makes us too slow and complicated," Blume said, adding that this was not a crisis at VW but a crisis facing the entire automotive industry.

Two months ago, the management board's savings and future plans were discussed for the first time in the supervisory board - and failed due to opposition from workers and the state of Lower Saxony.

Lower Saxony premier calls deal a fresh start for Volkswagen

Lower Saxony state Premier Olaf Lies described the agreement on Volkswagen's cost-cutting plans as a "sustainable concept" for the carmaker.

Lies, who is also a member of VW's supervisory board, said the company was investing heavily in its future viability and strengthening its competitiveness. 

"At the same time, we will develop long-term prospects for all sites - with new vehicles where this makes economic sense, and with new forms of industrial value creation," Lies said in a statement from the state chancellery.

The premier also described the agreement as a fresh start. "Today's decision is the beginning of a joint path, but there is a lot of work ahead for everyone involved," Lies said. This applied to the negotiating parties, politicians and the management board, "which has received a clear mandate, but also comes with clearly defined tasks."

Lies also said the challenges facing Volkswagen and Germany's car industry were enormous given international competition.

Lower Saxony holds a 20% stake in Volkswagen.

50,000 jobs to be cut worldwide

One of the most consequential elements of Thursday's agreement is the planned worldwide cut of around 50,000 jobs, including management positions. The company did not initially provide a breakdown by brand, country or site.

At recent staff meetings, Blume said he expected half of the required adjustments to come in Germany. 

In 2024, VW management and employee representatives had already agreed on a job-cutting programme in Germany under which 50,000 jobs across the group are to be eliminated by 2030. Of these, 35,000 jobs are to go at the core VW brand, with the remainder at subsidiaries such as Audi and Porsche.

The Volkswagen Group is also being geared towards annual production of 9 million vehicles, around 1 million fewer than currently. It aims to achieve an operating return on sales of 9% by 2030. The margin stood at 3.8% in the first half of the year.