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Photo by Ronny HARTMANN/AFP via Getty ImagesVolkswagen AG’s supervisory board backed a sweeping restructuring that calls for 50,000 additional job cuts, far fewer models and a smaller industrial footprint, giving chief executive Oliver Blume his clearest mandate yet to overhaul Europe’s biggest carmaker.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorThe measures approved Thursday at a meeting in Wolfsburg double workforce reductions across Volkswagen Group brands since late 2024, while also paving the way for the company to slim its vehicle lineup by as much as half by 2035. The new staff cuts, about half of which will affect German operations, represent roughly eight per cent of VW’s global workforce as of the end of last year.Management is pursuing the reductions in response to declining sales in China, high costs in Germany and underused factories. VW is also tightening investment, planning €135 billion (US$157 billion) of capital expenditure and research and development spending over 2027 through 2031, about 16 per cent less than the investment round agreed on last year.FP Work touches on HR strategy, labour economics, office culture, technology and more.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Work will soon be in your inbox.We encountered an issue signing you up. Please try againThe spending reductions come as Chinese rivals led by BYD Co. expand in Europe, adding to pressure to cut costs and direct investment toward its strongest businesses.The shares surged as much as 9.7 per cent in Frankfurt, the biggest intraday advance since March 2023, before paring about a third of the gain. They had fallen by more than a fifth over the past year through Thursday’s close.“This is a brave plan and a realistic decision for all concerned,” analysts at Citigroup wrote in a note, calling the agreement “existential” for the carmaker.It “should further allow VW to continue to move capital to its highest-return brands and models, without the need to maintain excess capacity utilization,” they added.VW’s works council, which represents the company’s employees, sought to temper the potential for job losses. It said the 50,000 figure is a management planning assumption of the number of staff cuts required to achieve Volkswagen’s target of a nine per cent margin by 2030, rather than a fixed headcount goal. A spokesman for the labour group said that compulsory layoffs remain ruled out through the end of 2030 under existing agreements.That distinction reflects the broader compromise behind Thursday’s unanimous board vote, reached a day earlier than expected after weeks of increasingly bitter rhetoric.“Volkswagen is at a positive turning point, with scope to tackle structural inefficiencies and further corporate restructuring. More significant is VW’s plan to cut its portfolio of businesses and shareholdings by about one-third and overhaul group governance.”— Michael Dean, senior industry analyst, and Giacomo Reghelin, senior associate analyst. Click here for full note.Labour representatives had accepted that Volkswagen needed further cost reductions. But they fiercely opposed plant closures, moves to weaken co-determination — Germany’s system of worker representation — and plans to separate parts of the core VW business, a carve-out which labour officials said is now “off the table.”In the final package, dubbed “Future Plan 2030,” Blume won backing for the extra job cuts and broad efficiency measures. The overhaul targets annual sales of about nine million vehicles, broadly the current level.Workers secured assurances that no factory would be immediately abandoned and that contentious site decisions would be worked through over the coming months.The deal stops short of closing factories right away. VW acknowledged that it currently has about 500,000 vehicles-worth of excess annual capacity in Europe.The company said its factories in Emden, Hannover, Neckarsulm and Zwickau currently lack competitive future production plans once existing models phase out between 2031 and 2034. Alternative uses for the plants will now be explored.That gave labour-friendly board members room to support the overhaul without abandoning core red lines. IG Metall union chief Christiane Benner and works council head Daniela Cavallo said the compromise had “prevented a dangerous escalation,” while stressing that no plant closing had been agreed upon and that plans to separate the VW passenger-car and components businesses were off the table.“The work is only just beginning,” the labour chiefs said of the restructuring plan. “What we will continue never to accept, however, is the burden being placed one-sidedly on employees.”The Porsche-Piëch family, which controls a majority of VW’s voting rights through Porsche SE, has pushed for faster action as returns and dividend flows come under pressure.Blume has argued that Volkswagen can no longer afford to carry the same sprawling cost base and industrial footprint while funding investments in electric vehicles, batteries and software.Porsche SE “welcomes this decision and intends to continue to support the transformation efforts of the board of management of its core investment, Volkswagen AG,” a spokesperson said in a statement. Porsche SE shares rose as much as 6.4 per cent on Friday, their biggest intraday advance since April 2025.—With assistance from Jan-Patrick Barnert, Stefan Nicola, Jonas Ekblom and Jamie Nimmo. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.