Struggling German automaker Volkswagen (VW) is preparing to cut up to 100,000 jobs from its 630,000-strong workforce, as it battles to survive against agile Chinese electric vehicle (EV) competitors. The company's bloated headcount, once a symbol of Germany's industrial might, has become a massive burden, forcing painful restructuring.
VW employs nearly 630,000 people worldwide (680,000 including joint ventures in China), which is about 60% more than Toyota, 140% more than Stellantis, and nearly 240% more than Ford. This workforce was a sign of strength in the past, but now it's a liability. After trimming thousands of positions last year, VW's Supervisory Board on Thursday backed a plan to cut an additional 50,000 jobs globally, including tens of thousands in Germany. The board also considered closing four German factories but stopped short of immediate approval.
The cuts will affect VW's luxury brands like Porsche and Audi. Other German automakers and suppliers face similar pressures: Mercedes-Benz plans to cut several thousand jobs, and Bosch has announced significant cost savings. Much of VW's headcount issue stems from long-standing strategic decisions. Meghan Ostertag, an analyst at the US-based Information Technology and Innovation Foundation, says VW chose to control more stages of production than its peers, increasing labor demand and costs. "Factory expenses in Germany can be up to twice those of the competition," she told DW.
Experts also point to VW's aggressive acquisition strategy over the years, bringing brands like Skoda, Porsche, SEAT, and Bugatti into the fold. "The complexities of integrating all those brands, supply chains, and different designs make VW very complicated to operate," said Daniel Harrison, senior automotive analyst at Ultima Media in London. Although VW survived the 2015 Dieselgate emissions scandal without lasting financial damage, it incurred massive costs and soon faced new problems, including a slow transition to EVs just as Chinese EV makers gained traction.
VW's delay contributed to slower sales in China, which accounts for a third of its total sales, as well as softening demand in Europe. The company repeated a mistake made by the US auto industry in the 1960s and 1970s, when the Big Three were bloated and slow to adapt to Japanese and European competition. By the time they shifted to leaner production, a decade had passed, and they had fallen significantly behind, noted Ostertag.
Toyota, which produces a similar number of vehicles, operates with nearly half as many workers by relying more on suppliers, higher automation, and a simpler management structure. Auto industry analyst Matthias Schmidt pointed to the "stranglehold" that trade unions and a key shareholder have over VW, causing "years of neglect in readjusting workforce numbers." The state of Lower Saxony, home to VW's headquarters, holds 20% of voting rights and can veto major decisions, often pressuring executives not to close plants or lay off staff.
Analysts warn that VW may need to cut more than the annual €4 billion it hopes to save to secure its future. The current proposals will help short-term profitability, but deeper reforms may be needed. Ostertag recommends VW invest more heavily in automation to "better compete with leaner firms" like China's BYD. VW has lagged in plant automation but is increasing investments in robotics and digital upgrades for EV production. It also plans its first sub-€20,000 EV next year.
With China responsible for around 30% of VW's global vehicle output, Harrison predicts more production shifts to Asia and potential sharing of European plants with Chinese EV producers, a move previously seen as "unthinkable." On the policy front, the German government is providing subsidies and loans for domestic EV battery plants to reduce reliance on Chinese imports. The European Union is advancing the Industrial Accelerator Act (IAA) to boost competitiveness and shield strategic industries from unfair Chinese competition.
The EU has imposed tariffs of up to 45% on Chinese-made EVs, but these are far below the 100% levies charged by the US, which have largely shut Chinese competitors out of the American market. Historian Niall Ferguson from Harvard University warned that Europe has been slow to respond to China's strategy of huge subsidies to EV makers. "Unless there's radical change, I predict: Europeans will be driving Chinese cars on a massive scale very soon," he told Germany's Süddeutsche Zeitung.
Economist Moritz Schularick, president of the Kiel Institute for the World Economy, suggested using market access as leverage, only allowing Chinese brands to sell in Europe if they produce locally. He provocatively predicted that VW would "likely be bought by a Chinese car maker like BYD." The article, originally published on July 7, 2026, has been updated to include the Supervisory Board's backing for the restructuring plan.
Source: www.dw.com