FRANKFURT: Volkswagen’s board of directors on Thursday approved a sweeping cost-cutting plan that would cut 50,000 jobs, slim the company’s model line by half and end auto production at four German plants.
The plan put forward by CEO Oliver Blume to counter low-cost competition in China and headwinds from U.S. tariffs overcame resistance from employee representatives and the regional government, which holds a stake in the company.
“This is a strong signal for the future of Volkswagen Group,” Blume said in a statement. The plan would “make our iconic brands even more attractive, stronger and competitive.”
The plan foresees reducing the number of models by around 50%. The company said it had excess production capacity of 500,000 vehicles in Europe and that “a competitive future production allocation … cannot be secured” for plants in Emden, Zwickau, Hanover and Neckarsulm, although alternative uses will be explored. The board statement said there would be an “adjustment of the employee numbers of around 50,000 positions,” including management jobs.
Slimming the number of models would mean higher volumes per model, lowering fixed costs.
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