WOLFSBURG - Volkswagen plans to drastically cut its model lineup and further pare back capacity, as Europe’s largest automaker considers a far-reaching overhaul that sources say could cost around 100,000 jobs.Volkswagen is under unprecedented pressure to restructure the business model that underpinned its success for decades, as it grapples with high costs and excess capacity at home. Those factors, along with rising Chinese competition, regulation, and US import tariffs, have sliced its profit margins in half between 2021 and 2025.The company said on July 9 following a supervisory board meeting that its lineup would be gradually cut by up to half, as it concentrates on the most attractive market segments. Production capacity will be reduced to nine million vehicles per year, down from 10 million currently.“The global situation has continued to deteriorate over the past twelve months,” Volkswagen chief executive Oliver Blume said. “That is why we are acting now.”Sources have said Blume is considering closing four German plants – Hanover, Emden, Zwickau and Audi’s Neckarsulm site – and cutting up to 100,000 jobs, roughly double the number currently planned.Volkswagen did not comment on what sources have said about potential job cuts and factory closures, which drew massive worker protests across company sites on July 9.The prospect of plant closures and deep job cuts at one of Germany’s most storied companies, founded 89 years ago, exemplifies the challenges Europe’s largest economy faces as it struggles with weak growth and high labour and energy costs.Worker protestsAt the board meeting at Volkswagen’s headquarters in Wolfsburg on July 9, Blume faced the committee’s powerful labour representatives, who oppose deeper cuts across the group, which includes the Audi and Porsche brands. He is also under pressure from the Porsche and Piech owner families, whose core investments have lost tens of billions of euros in market value in recent years. Volkswagen shares have lost more than half their value in the last three years.In Wolfsburg, workers blew whistles, waved red union flags and marched behind a banner reading “gemeinsam stark” – “strong together” – as a klaxon sounded in the background.The IG Metall union said around 400 people were demonstrating in Wolfsburg, with union representative Thorsten Groeger warning the company risked a “major conflict” with workers. Daniela Cavallo, the head of the company’s works council, which represents employees, said staff were not to blame for the sector’s crisis, and “great fear and deep uncertainty” were spreading across company factories and offices.Volkswagen’s works council called on Blume to address speculation around job cuts and plant closures by a July 10 deadline, warning of further extraordinary staff meetings in the months ahead if he did not.“Not a word about production, not a word about employment,” said German automotive industry analyst Ferdinand Dudenhoeffer. “One could also say that uncertainty remains – which is not good for customers, employees and investors.”Volkswagen faced mass strikes in December 2024, but there is currently an agreement for workers not to take industrial action while existing work contracts are in force. The company’s supervisory board includes representatives of the owner families, unions and the Lower Saxony state government, a power-sharing structure that often complicates decision-making. REUTERS