Volkswagen has approved a major restructuring plan that would eliminate about 50,000 jobs, cut its model lineup roughly in half and end vehicle production at four plants in Germany as the automaker confronts mounting pressure from lower-cost Chinese rivals and U.S. tariffs.
The plan, advanced by Chief Executive Oliver Blume, is aimed at reducing costs and simplifying the company’s sprawling operations. Volkswagen said it has excess production capacity of about 500,000 vehicles in Europe and that current conditions no longer support continued auto production at plants in Emden, Zwickau, Hanover and Neckarsulm.
The company said it will explore alternative uses for those facilities.
Volkswagen also plans to reduce the number of models it sells by about 50%, a move intended to concentrate production volumes on fewer vehicles and lower fixed costs. The restructuring calls for leaner management structures and shorter decision-making lines across the company.
The planned workforce reduction includes management positions and represents one of the most significant cost-cutting efforts in Volkswagen’s recent history.
The proposal faced resistance from employee representatives and the government of Lower Saxony, which holds a stake in the company and has representation on Volkswagen’s supervisory board. Worker representatives hold half of the board’s seats.
Chief employee representative Daniela Cavallo said the restructuring was necessary for Volkswagen to remain competitive, while emphasizing that the burden of the transformation should not fall solely on employees.
Lower Saxony Gov. Olaf Lies said the company is facing significant challenges and described the plan as a path toward the broader transformation Volkswagen needs.
The automaker has been under increasing financial pressure as competition intensifies in China and its global operations contend with tariffs and weaker demand in some markets. Volkswagen reported a 30% drop in after-tax earnings for the first half of the year, with declining sales in China weighing on results.
Volkswagen employs about 650,000 people worldwide. In addition to its namesake brand, the group owns Audi, Skoda, Porsche and SEAT.