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Volkswagen’s leadership is warning that the company may need to cut an extra 50,000 jobs to stay competitive with auto industry rivals, according to an internal memo sent to staff.
The German automaker previously announced plans to cut 50,000 jobs across the company, including at its subsidiaries Porsche and Audi, and CEO Oliver Blume said in a memo reviewed by Reuters that further cuts are needed because Volkswagen is operating at a 20% cost disadvantage relative to its competitors.
The memo said that situation means a “theoretical deduction” of another 50,000 jobs across the company’s worldwide footprint, effectively confirming prior reports that Volkswagen was weighing up to 100,000 job reductions.
“We are currently assessing across all brands, companies and regions how many adjustments are actually necessary and feasible,” Blume said in the memo, according to Reuters.
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Volkswagen is Europe’s largest automaker but has seen its profits slump amid higher tariff costs, tough competition in the Chinese market and pressure on its German manufacturing network to become more efficient.
Blume said in the memo that he prefers “intelligent solutions” over the closure of facilities, and previously suggested that underutilized factories could be used for the defense industry or to produce Chinese Volkswagen models in Europe.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| VWAGY | VOLKSWAGEN AG | 8.26 | +0.05 | +0.61% |
He said in the memo that looking into the next decade, the company “still cannot confirm competitive use cases for the plants of Emden, Hanover, Zwickau and Neckarsulm in the 2030s.”
The company’s leaders have faced angry calls from workers for the automaker’s management to explain its restructuring plans, which Blume presented to a supervisory board on Thursday.
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Reuters reported that sources familiar with the matter said labor representatives on the committee blocked proposals that were said to include job cuts and the possible closure of four factories.
Volkswagen’s statement after the meeting with stakeholders didn’t discuss job cuts or plant closures and instead announced plans to further reduce production capacity and gradually halve its lineup of models.
“Of course, it’s understandable that not everything has been planned out down to the last detail yet, and that certain issues still need to be further discussed and evaluated,” Blume said in his message to workers. “There will certainly be more meetings in which we will work hard to find the best solutions.”
Reuters contributed to this report.
