Volkswagen could cut up to 140,000 jobs as CEO warns of ‘critical’ situation 

Volkswagen is staring at one of the most consequential restructuring battles in its history, with labour representatives warning that as many as 140,000 jobs could eventually be affected as the German automaker attempts to overhaul its cost structure and respond to intensifying global competition.  

The warning comes as Volkswagen CEO Oliver Blume and VW brand chief Thomas Schäfer meet workers at the company’s Wolfsburg headquarters to explain the next phase of the turnaround. The meetings are the first in a series of town halls across Germany, and come amid growing tension between management and powerful labour representatives, and a looming crisis. 

The 140,000 figure is not a formal Volkswagen layoff target. Rather, it represents the labour side’s calculation of the potential human cost of the restructuring. It combines around 50,000 job reductions already agreed in Germany, another 50,000 positions management has indicated could be required globally, and roughly 40,000 jobs linked to four German factories whose longer-term futures remain uncertain.  

A cost problem, not just a sales problem 

Blume has been unusually blunt about the company’s predicament. In an internal memo, he described Volkswagen’s situation as “more than critical”, arguing that the company cannot generate enough cash for future technologies, products, and manufacturing sites while operating with margins of less than 4%. 

The problem is structural. Volkswagen’s overhead costs are more than 30% higher than those of comparable competitors, according to Blume. At the same time, the company is dealing with falling profits in China, aggressive Chinese automakers expanding into Europe, excess manufacturing capacity in Germany, and the impact of US tariffs.  

That combination is forcing Volkswagen to confront a question that has dogged much of the European auto industry: how do legacy manufacturers built around large factories, complex product portfolios, and expensive labour structures compete with leaner rivals in an increasingly software- and EV-driven market? 

Volkswagen has already agreed to tens of thousands of job reductions and is planning further measures. These include cutting European production capacity by another 500,000 vehicles, reducing management layers, and substantially shrinking the number of models and equipment variants it offers.  

Germany becomes the battleground 

Four German plants, namely Emden, Hannover, Zwickau, and Neckarsulm, are at the centre of the uncertainty. Blume has said they may not achieve competitive capacity utilisation in the 2030s, although Volkswagen has stressed that no specific plant closures have been decided.  

For workers and unions, however, the prospect of further cuts represents more than a balance-sheet exercise. Daniela Cavallo, Volkswagen’s labour leader, told more than 10,000 workers gathered at Wolfsburg that confidence in Blume and the management board had been damaged, although she said it was not beyond repair.  

Union leaders have also warned of industrial action. IG Metall chief Christiane Benner has criticised Blume’s ambition to lift margins to 9%, while other labour representatives have signalled that strikes could be considered if management presses ahead without concessions.  

The stakes are therefore larger than another corporate cost-cutting programme. Volkswagen is attempting to reshape a century-old industrial model while navigating Germany’s powerful system of worker representation and state influence. 

Blume’s challenge is to persuade employees, unions, investors, and Volkswagen’s controlling shareholders that painful restructuring today is preferable to a much more painful decline tomorrow. 

The company’s supervisory board is scheduled to meet on September 4 to continue discussions on the turnaround. Until then, the 140,000 figure remains a warning rather than a forecast. But it captures the scale of the reckoning facing one of Europe’s most important automakers.