Volkswagen AG employees and IG Metall union members rally at the automaker's headquarters in Wolfsburg, Germany, on July 9, the day of the company's supervisory board meeting.Lisi Niesner/Reuters
Volkswagen VWAGY may need to cut about 50,000 more jobs to match the competitiveness of rivals, its CEO told staff in an internal memo, effectively confirming for the first time that the automaker is looking to reduce up to 100,000 positions.
Oliver Blume is battling to streamline Europe’s biggest carmaker, whose profits have slumped as it faces billions of euros in tariff costs, stiff competition in China and pressure on its German manufacturing network to become more efficient.
After already agreeing 50,000 job cuts across the group, including its Porsche and Audi subsidiaries, the company must work on reducing costs further, having calculated a cost disadvantage versus comparable companies of 20 per cent, Blume said in the memo seen by Reuters.
This means a “theoretical deduction” of another 50,000 jobs worldwide, the memo said.
“We are currently assessing across all brands, companies and regions how many adjustments are actually necessary and feasible,” Blume said in the document.
‘Intelligent solutions’ preferred to plant closings
The company had previously declined to comment on reports it was considering up to 100,000 job losses.
The memo follows angry calls from workers for management to explain its restructuring plans, which Blume presented to the company’s supervisory board on Thursday.
Sources familiar with the matter said labour representatives on the committee blocked the proposals, which were said to include job cuts and the possible closing of four factories.
“As of today, we still cannot confirm competitive use cases for the plants of Emden, Hanover, Zwickau and Neckarsulm in the 2030s,” Blume said in the memo.
He said he preferred “intelligent solutions” to closings, having previously pointed to the defence industry or the production of Chinese Volkswagen models in Europe as options for underutilized factories.
Volkswagen made no mention of job cuts or plant closings in its statement following Thursday’s talks with key stakeholders.
Instead, the company announced plans to further reduce its production capacity and gradually halve its sprawling lineup of models – measures that analysts said fell short of solving Volkswagen’s current woes.
“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.”