Volkswagen layoffs could hit 1 lakh as CEO warns of deeper cost overhaul

Volkswagen could eliminate tens of thousands more jobs as part of a sweeping effort to restore its competitiveness, with Chief Executive Oliver Blume warning employees that the carmaker's cost base remains significantly higher than that of its rivals. An internal memo seen by Reuters indicates that the company is evaluating whether another 50,000 positions could be cut globally, on top of reductions already announced across the group.

If implemented, the latest proposals would take the total number of planned job losses to around 1,00,000, marking one of the most significant restructuring programmes in Volkswagen's history. The move reflects mounting pressure on the German automotive giant as it confronts slowing profitability, rising geopolitical costs and an increasingly competitive global electric vehicle market.

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Volkswagen has already agreed to reduce approximately 50,000 roles across its operations, including at premium brands Porsche and Audi. However, management believes further measures may be required to narrow what it estimates is a 20 per cent cost disadvantage compared with similar manufacturers.

CEO outlines need for deeper restructuring

In the internal communication, Blume told employees that the figure represented a "theoretical deduction" based on the company's cost calculations rather than a confirmed target, according to Reuters. He added that Volkswagen was reviewing operations across its brands, subsidiaries and international markets to determine what level of workforce adjustment would ultimately be required.

The memo is the clearest indication yet that management is considering a second, much larger phase of restructuring after previously declining to comment on reports suggesting as many as 1,00,000 jobs could be affected.

The discussions follow a supervisory board meeting held on Thursday, where Blume presented proposals aimed at improving the company's long-term financial position. According to people familiar with the matter, employee representatives opposed elements of the restructuring plan, including potential job reductions and the possible closure of several manufacturing facilities.

Volkswagen did not publicly mention workforce cuts or factory closures after the meeting. Instead, the company announced plans to reduce manufacturing capacity and gradually shrink its extensive portfolio of vehicle models, steps analysts viewed as only part of the broader changes needed to address the group's structural challenges.

Factory future remains uncertain

Among the biggest questions facing Volkswagen is the future of several German production sites. In the memo, Blume acknowledged that the company has yet to establish competitive long-term business cases for factories in Emden, Hanover, Zwickau and Neckarsulm beyond the current decade.

Despite that uncertainty, he suggested management would prefer alternatives to outright closures wherever possible. Previous discussions have included exploring defence-related manufacturing opportunities or producing Volkswagen models developed in China at underutilised European facilities as ways of keeping plants operational.

Blume also sought to reassure employees that discussions remain ongoing and that final decisions have not yet been reached. While acknowledging that many aspects of the restructuring still require further evaluation, he indicated additional meetings would take place as management and labour representatives continue negotiations.

Volkswagen's latest review underscores the profound transformation reshaping the global automotive industry. Traditional manufacturers are under growing pressure to reduce costs while investing heavily in electric vehicles, software development and new manufacturing technologies. Combined with fierce competition from Chinese automakers and the financial impact of tariffs, these challenges have forced several established carmakers to rethink production networks, workforce requirements and long-term investment priorities.

For Volkswagen, Europe's largest carmaker, the coming months are likely to determine how far it is prepared to go in reshaping its business to remain competitive in a rapidly evolving market.