VOLKSWAGEN Group will cut around 50,000 additional jobs, halve its model portfolio, and potentially repurpose four German factories under the most extensive restructuring program in its history.
The German automotive giant’s supervisory board has unanimously approved chief executive Oliver Blume’s Future Plan 2030 following months of negotiations with unions and the state of Lower Saxony.
The latest workforce reduction comes on top of approximately 50,000 positions already being removed, potentially taking the total reduction across the group to around 100,000 jobs.
Volkswagen employs about 650,000 people globally across brands including Volkswagen, Audi, Skoda, Seat, Cupra, Porsche, Bentley, Ducati, and Lamborghini.
Management positions will be included in the latest cuts, although Volkswagen has not detailed where the reductions will fall or provided a timetable for their implementation.
At the same time, the group intends to reduce its model portfolio by around 50 per cent by 2035, concentrating production on fewer vehicles and variants in an attempt to increase volumes per model and improve economies of scale.
The future of the Seat brand is also reportedly under a cloud.
Volkswagen has also acknowledged that its European manufacturing network has annual excess capacity of more than 500,000 vehicles.
The future of its Emden, Hanover, Neckarsulm, and Zwickau factories is consequently under review, with the plants facing the end of existing model production between 2031 and 2034 without confirmed replacement products.
However, immediate plant closures have been avoided under the agreement, with Volkswagen saying alternative uses for the four facilities will be investigated.
The compromise represents a significant breakthrough for Mr Blume after his restructuring proposals met strong resistance from employee representatives and Lower Saxony, which holds 20 per cent of Volkswagen’s voting rights and two seats on the supervisory board.
“This is a strong signal for the future of the Volkswagen Group,” said Mr Blume.
“Given intensifying global competition, shifting demand and technological change in the automotive industry, a consistent alignment of workforce capacity with economic reality is essential.”
Volkswagen is attempting to substantially reduce its sprawling cost base as it simultaneously funds major investments in electric vehicles, batteries, and software.
The group is targeting an operating margin of 9.0 per cent by 2030 on annual vehicle sales of around nine million units.
It has also earmarked €135 billion ($A218b) for capital expenditure and research and development between 2027 and 2031.
The restructuring comes as Volkswagen faces pressure on several fronts, including declining profitability in China, increasingly aggressive competition from Chinese manufacturers in Europe, and the cost of US import tariffs.
Its once highly lucrative Chinese operations have been particularly hard hit, with profits from its businesses and joint ventures in the market falling by more than 80 per cent over the past decade.
Volkswagen Group’s profit margin fell to 2.8 per cent in 2025, its lowest level in at least a decade, compared with 7.9 per cent in 2022.
The company has also reported an 8.4 per cent fall in vehicle sales during the first half of 2026, while operating profit declined 11.6 per cent.
Its European factories, meanwhile, continue to carry considerably more production capacity than current demand requires.
Reducing the number of models is intended to attack another longstanding Volkswagen problem – complexity.
Rather than spreading development and manufacturing expenditure across a large number of models and derivatives, Volkswagen plans to focus investment on fewer vehicles while substantially reducing the number of configurations offered.
The company says the remaining models will benefit from greater production volumes, lower costs, and stronger economies of scale.
The agreement also appears to have headed off a potentially damaging confrontation between management, unions and Lower Saxony.
Employee representatives hold half the seats on Volkswagen’s supervisory board, giving organised labour considerable influence over major corporate decisions.
Union leaders had accepted the need for further cost reductions but opposed factory closures and proposals that could weaken Germany’s co-determination system.
IG Metall president Christiane Benner and Volkswagen Works Council chair Daniela Cavallo said the agreement meant no factory had yet been abandoned.
They also said a proposed separation of the Volkswagen passenger-car and components operations had been taken off the table.
Compulsory redundancies at the Volkswagen brand remain ruled out until the end of 2030 under existing agreements.
The works council has also stressed that the additional 50,000-position reduction is a planning assumption linked to Volkswagen’s 2030 profitability target rather than a fixed number of employees that must be dismissed.
Nevertheless, the scale of the Future Plan illustrates the financial and competitive pressure now facing Europe’s largest automotive group.
Volkswagen has spent decades building one of the industry’s broadest collections of brands, models, factories, and component operations, but management now believes that structure is too expensive to maintain while simultaneously funding the transition to new-generation electric and software-defined vehicles.
The group will also review its portfolio of businesses and shareholdings, retaining operations considered to make a clear strategic or financial contribution to its core automotive activities.
Non-strategic operations could be sold or reorganised, while Volkswagen’s extensive real-estate holdings will also come under review.
For the four German factories without confirmed replacement products, the critical decisions are still several years away.
Existing production is expected to progressively end from 2031, giving Volkswagen time to find alternative products or other uses for the plants.
But with half of the group’s model portfolio destined to disappear and more than half a million vehicles of unused European production capacity already identified that the pressure to find viable replacements is considerable.