Volkswagen CEO Oliver Blume: Our manufacturing costs are 30% higher than competitors, and half of the next round of layoffs will be in Germany.

According to Bloomberg, Volkswagen Group CEO Oliver Blume told thousands of employees at the Wolfsburg plant that roughly half of the next round of workforce reductions needs to occur in Germany, as the company's fixed costs are 30% higher than competitors.

Addressing widespread speculation about 50,000 global job cuts, Blume clarified that this was merely a theoretical calculation, not a set target. He also stated that closing plants would be the last and most expensive option, and that the company would pursue voluntary workforce adjustments wherever possible, aiming to create a stable outlook for German plants within the next 6 to 12 months.

Volkswagen currently faces a cost disadvantage of around 30% compared to some competitors, requiring at least €10 billion in indirect cost reductions. Management is developing a new plan to further cut annual European production capacity by 500,000 vehicles, while streamlining management layers and significantly reducing the number of models and configuration variants.

However, labor remains resolute on layoffs. Volkswagen Works Council Chairwoman Daniela Cavallo issued a statement saying that employees' trust in management, particularly the CEO, has been damaged, though not beyond repair.

The union argues that employees are paying for management's years of mistakes in software, electric vehicles, and China market strategy, and warned that if Blume does not withdraw his plans, the union is willing to consider strikes.

According to union estimates, up to 140,000 positions could be at risk, including approximately 50,000 already agreed cuts in Germany, 50,000 potential global cuts, and around 40,000 tied to four German plants with uncertain prospects.

Additionally, the Porsche-Piech family, which controls Volkswagen Group, has urged management to accelerate action, warning that Volkswagen stands at a historic crossroads.

In 2025, Volkswagen Group's operating profit fell 53% to €8.9 billion, with an operating margin of 2.8%—the worst since the dieselgate scandal. Under the established schedule, the group's supervisory board will continue discussing the restructuring plan on September 4.

Notably, Volkswagen's unique governance structure means Blume cannot unilaterally decide on layoffs; he must secure support from labor and the state government of Lower Saxony, which holds veto power over major decisions. This transformation tug-of-war is destined to be protracted.