Words: Kyle Cassidy
Published 26 August 2026
Volkswagen Group is preparing for what could be the biggest restructure in its history, with further job cuts, factory closures and a smaller model range all under consideration.
Chief executive Oliver Blume reportedly warned employees that the company’s “situation is more than critical” in an internal memo. Volkswagen is grappling with intense competition from Chinese manufacturers, falling returns from China, US tariffs and operating costs said to be substantially higher than those of its rivals.
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The Group’s supervisory board is due to meet on September 4 to consider its turnaround strategy. An earlier proposal failed to secure sufficient board support in July, while employee representatives and the German state of Lower Saxony have prepared alternative plans. Reuters reports that Blume faces significant resistance from unions and other influential Volkswagen stakeholders.
Up to 50,000 additional jobs could reportedly be affected by the restructuring, potentially adding to reductions already under way. However, no final target has been set.
“The frequently cited figure of around 50,000 jobs worldwide is not a fixed target,” Blume said.
Volkswagen is expected to favour voluntary departures and early-retirement schemes where possible, although compulsory redundancies haven’t been ruled out.
Factories and models under scrutiny
Plant closures are also on the table. Four German facilities, Emden, Hanover, Zwickau and Audi’s Neckarsulm plant, are reportedly under particular scrutiny. Production at Volkswagen’s Osnabrück factory is already scheduled to end in 2027, although the company is examining possible alternative uses for the site.
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Volkswagen is also looking at ways to simplify its sprawling model range. Overlapping vehicles and poorly selling variants across its brands could disappear when they reach the end of their current product cycles.
The Group includes Volkswagen, Audi, Škoda, Cupra, Porsche, Bentley and Lamborghini, among others. Sharing more technology and reducing the number of platforms, components and management layers could help lower costs and speed up vehicle development.
The urgency is being driven partly by Chinese manufacturers, which are developing and launching new vehicles at a pace established European companies have struggled to match.
Profitable, but not profitable enough
Despite the grim internal warning, Volkswagen isn’t running out of money. Its official first-half results show revenue of €158.1 billion, largely unchanged from the same period in 2025.
The problem is the return being generated from that revenue. Operating profit fell 11.6 per cent to €5.9b, while the operating margin slipped from 4.2 to 3.8 per cent. Volkswagen says that isn’t enough to fund future vehicles, technology and manufacturing facilities over the longer term. Volkswagen Group has already called for lower overheads, less complexity and faster decision-making.
