Volkswagen faces increasing financial pressure due to high tariffs and a shrinking market share in China and North America, although its electric vehicle sales in Europe remain robust. On July 9, 2026, workers at several factories, including Zwickau, in eastern Germany, held protests organized by the IG Metall union. Protesters displayed banners calling for unity in the fight for the future of the Volkswagen Group, in response to restructuring plans and possible job cuts that would be presented to the automaker’s supervisory board.

On the same day, the supervisory board of the largest European automaker that owns brands such as Audi, Porsche, Skoda and Lamborghini received the restructuring proposal. The objective was to mitigate the erosion of profit margins. However, the plan was rejected by a vote of 12 to 7. Although the company’s public statement did not directly mention factory closures or layoffs, the vote indicated a significant impasse.

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Unlike most car manufacturers, the Volkswagen Group has a supervisory board with strong labor representation. Half of the 20 seats are occupied by worker representatives. Additionally, two positions are reserved for delegates from the German state of Lower Saxony, which has an equity stake in the company, ensuring that profit is not the only factor in the company’s strategic decisions.

Historically, Volkswagen has faced protracted negotiations with unions over any proposed job cuts. In 2024, after months of talks, the company and labor entities reached an agreement to cut 35,000 jobs by 2030.

The scenario worsened, and the number of expected layoffs rose to 50,000 in March this year. At the end of June, a German magazine reported that reductions could reach 100,000 employees by 2030, in addition to the unprecedented possibility of closing four factories in Germany, something unprecedented in the company’s history.

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Despite speculation, Volkswagen’s public statement on the restructuring plan made no explicit mention of job losses or plant closures.

The company document, however, details a substantial overhaul of its model lineup. The proposal is to halve the number of vehicles offered across all its brands, focusing on the “most attractive market segments”. Simplification would also affect production, with a reduction of up to 75% in the complexity of equipment options available for cars.

Still in the plan, a difference was highlighted between global demand and the Volkswagen Group’s production capacity. While demand is around 9 million vehicles annually, manufacturing capacity is 10 million. The company highlighted that it had already reduced its capacity by 2 million units since the COVID-19 pandemic.

So, although the plan did not directly announce job cuts or factory closures, the decrease in vehicle production and model variety suggests lower labor intensity.

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With the rejection of the plan, the Volkswagen Group board, led by figures such as CEO Oliver Blume, will now have to devise new strategies to face financial and market challenges.