Volkswagen Considers 50,000 Additional Job Cuts Amid Cost Pressures, Reuters Reports

Volkswagen is considering an additional 50,000 job cuts as it grapples with a significant cost disadvantage compared to its rivals, according to an internal memo seen by Reuters. The potential workforce reduction was outlined by Chief Executive Oliver Blume as a necessary step to enhance the company's competitiveness.

Cost Disadvantage Drives Potential Cuts

In the memo to employees, Blume stated that Volkswagen has calculated a 20% cost disadvantage relative to comparable automakers. This gap, he explained, translates into a "theoretical deduction" of another 50,000 positions across the company's global operations.

These potential cuts would be in addition to 50,000 job reductions the company has already agreed to implement across the group, which includes its Porsche and Audi brands. "We are currently assessing across all brands, companies and regions how many adjustments are actually necessary and feasible," Blume wrote, indicating that a final decision has not been made.

Broader Restructuring Strategy

The potential staff reductions are part of a wider restructuring effort aimed at improving efficiency amid fierce market competition, particularly from Chinese automakers. Last week, Volkswagen announced plans to streamline its vehicle portfolio, potentially cutting its model lineup by as much as half to focus on its most profitable market segments.

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Blume noted that the company is also adjusting its manufacturing capacity to align with current demand, citing a deteriorating global situation over the past year. These measures are designed to lower costs and accelerate decision-making as the automotive industry undergoes a major transformation.

Context of Ongoing Measures

This latest development builds on a cost-saving program initiated over 18 months ago. That plan, reached with Volkswagen's union, included 35,000 job cuts in Germany by the end of the decade and a separate agreement for 15,000 reductions at Audi, Porsche, and the Cariad software division.

While the company reported a reduction in overhead costs by €1 billion in the first quarter of this year, it warned at the time that further actions would be required to meet its financial targets. The new considerations for deeper cuts underscore the mounting pressure on the German auto giant to close the profitability gap with its global peers.