German Volkswagen leader praises cost-reduction agreement, yet shares experience a dip
Volkswagen, the German automaker facing a multifaceted crisis, has announced a restructuring strategy that includes a reduction of 35,000 jobs in Germany by 2030 [1][3]. This move is aimed at saving around €15 billion annually and addressing the challenges posed by rising costs, a stuttering switch to electric cars, and growing competition in key market China.
The job reduction is part of a package aimed at saving four billion euros a year [2]. Key reasons for the job cuts include delays in the conversion of traditional plants to electric vehicle (EV) production, financial pressures from tariffs and costs, and a broader automotive industry downturn in Germany [1].
The delay in converting the Wolfsburg main plant to electric vehicle manufacture may result in reduced working weeks starting from 2027, impacting income and production capacity [1]. US tariffs have imposed a €1.3 billion hit in early 2025, combined with restructuring costs of €700 million and increased sales of lower-margin EVs, leading to a 29–33% decline in Volkswagen's profit compared to the previous year [2][4][5].
The restructuring and job cuts will likely reduce overall output capacity, with the agreement leading to a reduction in production capacity of approximately 730,000 vehicles per year [3]. However, Volkswagen highlights strong EV order books and ongoing investments in electrification, aiming for a leaner, more cost-efficient production setup for long-term sustainability [2][4].
In addition to job cuts, Volkswagen's CEO, Oliver Blume, has called for lower taxes, fewer bureaucratic hurdles, and more affordable energy in Germany [6]. The crisis at Volkswagen began in September when the company announced it was considering closing factories in Germany for the first time and making heavy job cuts [7]. Two mass strikes followed the announcement, with union IG Metall threatening to launch the biggest wave of industrial action seen in Germany for decades [7].
Volkswagen's shares dropped more than three percent in afternoon trade in Frankfurt, making it the heaviest faller among firms listed on the blue-chip DAX index [8]. The 10-brand automaker, which includes brands such as Seat, Skoda, Porsche, and Audi, has managed to prevent plant closures at home for the first time with this agreement [9].
Blume stated that the main thing needed is to create the right conditions for Germany to "get off the hard shoulder and back on the fast track." [6]. Volkswagen's CEO, Oliver Blume, added his voice to calls for improving domestic conditions to help the country's businesses [6].
References:
- Volkswagen to cut 35,000 jobs in Germany by 2030
- Volkswagen to cut 35,000 jobs in Germany by 2030
- Volkswagen to cut 35,000 jobs in Germany by 2030
- Volkswagen's profits slump as it struggles with switch to electric cars
- Volkswagen's profits slump as it struggles with switch to electric cars
- Volkswagen CEO calls for lower taxes, fewer bureaucratic hurdles
- Volkswagen's planned job cuts in Germany face union backlash
- Volkswagen shares drop after job cuts announcement
- Volkswagen avoids plant closures at home with job cuts deal
The job cuts at Volkswagen, aimed at saving four billion euros annually, are part of a broader industry-wide downturn in Germany [1]. The restructuring strategy in the business sector, which includes a reduction of 35,000 jobs and the conversion of traditional plants to electric vehicle production, is also influenced by financial pressures from tariffs and costs [2].
