Key facts
- Volkswagen estimates its restructuring plan will cost €16 billion ($18.6 billion).
- The plan includes exploring alternatives for four German plants.
- Volkswagen plans to set aside up to €10 billion for job cuts by 2030.
- About €6 billion is earmarked for possible cessation of vehicle production at four plants.
Volkswagen estimates the total cost of its landmark restructuring plan, which includes job cuts and potential plant closures, at approximately €16 billion ($18.6 billion), according to a person familiar with the matter. The German carmaker, Europe's largest, is implementing its most significant restructuring to date in response to intense competition from China, rising tariffs, and overcapacity.
The plan involves reviewing the future of four German plants that are expected to run out of models within the next decade, and aims to reduce approximately 50,000 positions. German magazine Der Spiegel first reported the cost estimates.
Volkswagen intends to allocate up to €10 billion by 2030 to cover measures for eliminating around 60,000 jobs, such as retirement schemes and severance packages. An additional €6 billion is earmarked for the potential cessation of vehicle production at the four plants under review, though no final decisions have been made.
Lower Saxony's premier, Olaf Lies, is navigating a difficult political landscape as he balances supporting deep job cuts at Volkswagen with fending off gains by the far-right AfD party in upcoming municipal elections. The state, a key shareholder in Volkswagen, is home to six of the carmaker's plants. Lies dropped his opposition to the restructuring plan, arguing that inaction could have imperiled the company further, despite criticism that political influence hinders Volkswagen's ability to act. The AfD blames political meddling, including the EU's 2035 combustion engine phase-out, for the industry's woes and argues that job cuts are a catastrophe for families. Analysts expect at least two of the four threatened plants to close, with tough discussions anticipated into next year's election campaign.