Volkswagen shares jump after major restructuring deal targets 50,000 additional job cuts and leaves four German plants’ futures uncertain.
Shares in Volkswagen rose about 6% on Friday after the supervisory board of Europe’s largest automaker approved a major turnaround agreement aimed at averting a deepening conflict with unions and its key shareholder, the German state of Lower Saxony.
The agreement, reached late Thursday, represents the biggest restructuring in Volkswagen’s 89-year history. It includes plans for a further 50,000 job cuts, bringing the total number of positions targeted for elimination to 100,000, while leaving the future of four German plants unresolved.
The deal also prevents an unprecedented escalation between Volkswagen’s management, unions and Lower Saxony, which hold a majority of seats on the company’s supervisory board.
Management had considered convening a shareholder meeting to push through its restructuring demands, a move that could have triggered an unprecedented stakeholder confrontation at the automaker.
Moritz Kronenberger of Volkswagen shareholder Union Investment described the agreement as a positive development for the company and capital markets, despite the scale of the workforce and operational cuts.
“The ball is now entirely in the Executive Board’s court. There are no more excuses,” Kronenberger said, stressing that management must now focus on implementing the programme.
Volkswagen is seeking to restore profitability amid mounting pressure from US import tariffs, weak demand in the European market and increasingly competitive Chinese automakers.
These challenges have weighed heavily on the group’s operating margin, which stood at 3.8% in the first half of the year, down from a decade-high of 7.9% recorded in 2022.
Although the agreement did not specify where or when the additional job cuts would take place, Chief Executive Officer Oliver Blume previously said half of the planned savings would have to come from Germany.
That could translate into roughly 25,000 job cuts across Volkswagen’s German operations.
Further details of the restructuring will be negotiated between management and labour representatives. Unions secured a job guarantee covering most of Volkswagen’s German operations until 2030 under an earlier turnaround agreement reached in 2024.
Deutsche Bank analysts said the latest agreement does not resolve all of Volkswagen’s challenges but removes a major concern for investors.
They said the deal demonstrates that the company remains capable of making the difficult decisions necessary to address its structural and financial challenges.
