Volkswagen cuts 50,000 jobs, reduces models by 50% to boost profits

Volkswagen AG has announced plans to cut an additional 50,000 jobs as part of its ambitious transformation initiative, "Future Plan 2030." This move, which involves a significant reduction of its model lineup by 50% by 2035, aims to enhance cost efficiency and improve profitability in the face of challenging market conditions. The announcement was made during early trading on Xetra in Germany, where the company’s stock rose approximately 6.80%, reaching 82.35 euros per share.

The decision comes as Volkswagen grapples with a declining revenue growth forecast for fiscal 2027 and a sharp drop in its second-quarter profit, largely due to weakened production and sales, particularly in China. The company's board has approved a comprehensive plan consisting of 12 initiatives designed to secure its financial foundation and streamline operations. These initiatives include enhancing production competitiveness, adjusting workforce structures, and focusing on the most promising vehicle models.

Volkswagen's transformation plan also includes a significant investment of a three-figure billion sum over the coming years. The company expects to achieve annual sales of 9 million vehicles and maintain an operating margin of 9% by 2030, which equates to an operating profit of about 31 billion euros. To support these targets, Volkswagen anticipates overhead costs of 37 billion euros and plans to allocate 135 billion euros for capital expenditure and research and development between 2027 and 2031.

Looking ahead, Volkswagen aims to streamline its operations and reduce complexity in its model offerings by up to 75%. This focused approach is expected to allow the company to concentrate on fewer, high-volume models that excel in both design and technology. By the end of June 2027, Volkswagen plans to develop a sustainable production structure for its European plants, as it seeks to align its capacity with shifting market demands. This strategic overhaul is crucial for Volkswagen as it navigates an increasingly competitive global automotive landscape.