The Volkswagen Supervisory Board approved this Thursday its big transformation plan to regain competitiveness, a strategy that includes a reduction of around 50,000 jobs in Germany by 2030 among Volkswagen, Audi, Porsche, and CARIAD, and which leaves four German factories without guaranteed production starting next decade.
The plants affected by this uncertainty are Emden, Zwickau, Hannover, and Neckarsulm. The group's CEO, Oliver Blume, has acknowledged that currently Volkswagen does not see sufficient competitive utilization of those facilities during the 2030s, although he emphasized that no decision has yet been made to close any of them.
The adjustment is part of a broader transformation with which the German manufacturer aims to raise its operating margin to 9% by 2030, compared to the 3.8% recorded during the first half of this year. The group faces increasing competition, especially from Chinese manufacturers, while dealing with rising costs and the technological transformation of the automobile.
More than 500,000 cars of excess capacity in Europe
One of the main problems identified by Volkswagen lies in its European factories. The group estimates that it needs to eliminate a surplus capacity of over 500,000 vehicles annually in Europe and adjust its industrial network to a lower demand than expected when it made a good part of its investments.
"We cannot permanently maintain more production capacity than we can sell in the market", Blume explained when addressing the future of the four German plants. The manufacturer aims to gradually adapt its global capacity to approximately nine million vehicles annually. Before the pandemic, it had invested to be able to produce around 12 million.
The job cuts will also be significant. Volkswagen explains that since the end of 2024, the elimination of about 50,000 jobs in Germany by 2030 has already been agreed upon, through voluntary and socially responsible mechanisms, mainly partial and early retirements. According to Blume, around 37,000 agreements are already signed.
This precision is relevant in light of the figures of up to 100,000 layoffs that had circulated in recent months. The company maintains that 50,000 additional jobs globally do not currently constitute a closed objective, but rather a reference derived from the cost reduction needs that the different brands and regions are still studying.
Volkswagen will reduce its model range by up to half
The plan goes much further than the factories and the workforce. Volkswagen intends to reduce its model range by up to 50% and the complexity of its offer by up to 75%, eliminating variants and equipment with lower demand to concentrate resources on the vehicles it considers more profitable and competitive.
The strategy seeks to increase the number of units produced of each model, reduce costs, and better leverage economies of scale. The group will also concentrate platforms, electronic architectures, and software to eliminate parallel technological structures and leverage synergies among its different brands.