Volkswagen’s ‘More Than Critical’ Crisis: Why Up to 50,000 More Jobs Are at Risk

Volkswagen’s cost gap and weak margin

Blume said Volkswagen’s overhead costs remain more than 30% higher than those of comparable companies. The company therefore needs to reduce its structural cost disadvantage if it is to compete more effectively.

Profitability is another part of the problem. Blume described an operating return below 4%—reported at about 3.8%—as respectable in a difficult market but insufficient over the long term to generate enough funding for new technologies, products and sites.

That pressure helps explain why management is linking the restructuring to Volkswagen’s ability to invest, rather than presenting it solely as a short-term response to weaker earnings. Reuters reported that the group’s 2025 operating profit fell to €8.9 billion and that Volkswagen was forecasting an operating margin of roughly 4% to 5% for 2026 after a margin of 2.8% in 2025.

The competitive pressures behind the overhaul

Volkswagen is facing several pressures at once:

• Chinese automakers are expanding in Europe. Chinese brands are increasingly targeting Volkswagen’s home market, intensifying competition on price, technology and electric vehicles.
• China is becoming less profitable. Volkswagen’s important Chinese business is under pressure as local competition grows and market conditions weaken.
• U.S. tariffs are adding costs. Import duties are weighing on the group’s profitability alongside the wider competitive challenges.
• European capacity is too high. Falling profits and excess manufacturing capacity are making it harder for Volkswagen to support its existing factory network at competitive utilization levels.

Blume’s central argument is that deeper cost reductions are needed to preserve Volkswagen’s ability to compete and invest as the market changes.

Which German plants face an uncertain future?

Blume said Volkswagen does not expect Emden, Hannover, Zwickau and Neckarsulm to reach competitively high capacity utilization during the 2030s.

That does not mean closures have been finalized. The available reporting says no decision had been made on specific plant closures, while earlier restructuring proposals had included the possibility of closing four German sites.

The issue is therefore not only the number of jobs. Persistently underused plants could force Volkswagen to reconsider where models are built, how much capacity it maintains and whether individual sites can be given new work.

What else is included in Volkswagen’s restructuring plan?

The proposed overhaul goes beyond headcount. Measures under discussion or previously reported include:

• reducing the number of vehicle models;
• cutting manufacturing capacity;
• eliminating or reorganizing parallel and administrative structures; and
• potentially separating or carving out some divisions.

Volkswagen’s controlling families have also pressed the company’s stakeholders to support a more dramatic restructuring. Any final plan must therefore navigate the interests of management, workers, unions, the supervisory board and the German state of Lower Saxony.

What happens next?

The next stage is expected to involve direct discussions with workers and further governance decisions. Blume was due to visit plants considered exposed by the turnaround plan, while Volkswagen’s works council scheduled extraordinary employee assemblies in August. Meetings were planned at the Wolfsburg headquarters on August 25 and at Emden and Zwickau on August 26, giving employees an opportunity to question the CEO directly.

The supervisory board was also scheduled to continue discussing the turnaround plan on September 4.

The key takeaway

Volkswagen is not announcing a finalized additional layoff program of exactly 50,000 jobs. Blume is using that number to illustrate the scale of the savings needed to close a major cost gap. The potential consequences are nevertheless substantial: combined with previously agreed reductions, the restructuring under discussion could reach roughly 100,000 positions, while four German plants face the prospect of remaining underutilized in the 2030s.

The final number of job losses, the fate of specific factories and the shape of the broader overhaul still depend on negotiations and board decisions.