Volkswagen threatens mass layoffs as union warns of conflict

Volkswagen Workers Stage Nationwide Protests Amid Restructuring Fears

Volkswagen workers across Germany have taken to the streets in protest, as unions raise concerns about potential "major conflict" if the struggling automaker proceeds with what could become the most significant restructuring in the global auto industry. The company, Europe’s largest carmaker, is facing mounting pressure from US tariffs, shrinking profit margins on electric vehicles, and fierce competition in China — the world's biggest auto market.

The situation has led to thousands of job cuts already being announced, but reports suggest that CEO Oliver Blume is considering increasing these cuts to 100,000, including the possible closure of four factories in Germany. As VW executives presented their proposed overhaul to the supervisory board of the 10-brand group, protests erupted outside plants, with unions warning they are prepared to escalate industrial action.

Thorsten Groeger, an official from union IG Metall, stated: “Whoever takes on the workers is risking a major conflict.” He added, “We will not stand by and do nothing if the company does not change course.”

At one factory in Zwickau, eastern Germany, which is reportedly under consideration for closure, around 200 workers joined a demonstration. Union official Thomas Knabel told the crowd, “This site will not be closed, not against our will — we will defend it.” Protesters waved banners reading, “United, fighting for our future.”

Demand is Collapsing

Denny, a worker at a company that supplies the factory, told AFP, “The region is dead if VW leaves.” He said it was “entirely realistic” that the plant could close, adding, “Demand is collapsing, other brands are coming that are cheaper, Chinese brands are coming.”

Volkswagen, which includes brands such as mass-market Seats and premium Porsches, has already announced plans to cut up to 50,000 jobs in Germany, including 35,000 at its namesake brand. These cuts were part of a deal with unions reached at the end of 2024, which also included a ban on plant closures in Germany until at least the end of the decade.

However, the outlook has worsened significantly since then, prompting VW to consider more drastic measures. If the new plans are approved, it would result in a roughly 15-percent reduction in VW’s global workforce of approximately 630,000 employees. This would surpass all other major job-cutting efforts in the auto industry, including General Motors’ 2009 move to cut nearly 50,000 jobs during its bankruptcy.

The German Auto Industry Struggles

The entire German auto industry — including competitors like BMW and Mercedes-Benz — has been facing challenges in recent years, with job cuts and overhauls becoming increasingly common. The sector is under pressure from shifting market dynamics, regulatory changes, and rising costs.

Tricky Overhaul

Pushing through such a sweeping overhaul at Volkswagen could prove difficult. The supervisory board typically has 20 members split evenly between worker and shareholder representatives. However, due to a recent departure, the labor side currently holds a majority. Additionally, the company has a complex ownership structure that complicates decision-making.

The state of Lower Saxony, which owns a substantial stake in Volkswagen and is home to Wolfsburg and six VW plants, has the power to block decisions. No major announcements are expected after Thursday’s meeting, which is likely just the beginning of a long negotiation process, according to sources close to the matter.

A Volkswagen spokesman previously stated that the company needs to “improve its competitiveness” and apply “even more rigorous cost and investment discipline.”

Financial Pressures

Higher US tariffs on cars and auto parts introduced last year are expected to cost Volkswagen five billion euros ($5.7 billion) annually, with the impact particularly severe at Audi and Porsche, which have no US manufacturing facilities. The company is also losing ground in China, where declining sales have led to its lowest vehicle deliveries in the country since 2011.

Blume acknowledged in a March letter to shareholders that “our business model of past decades no longer works,” citing “regional market conditions, changes in trade policy, massive regulatory requirements in the various regions of the world and our high-cost position, above all in Europe.”

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