Key facts
- Volkswagen management is considering doubling job cuts to up to 100,000 positions.
- The company is also weighing the closure of four German factories.
- CEO Oliver Blume's restructuring plan could challenge the influence of labor and the state of Lower Saxony.
- Spinning off passenger cars and components into separate divisions is being considered to potentially bypass existing constraints.
- The IG Metall union has warned that carve-out plans are an 'attack on the VW law'.
Volkswagen management is reportedly planning its largest-ever restructuring, which could involve doubling planned job cuts to up to 100,000 positions and shutting four German factories. This move, driven by tariffs, rising costs, and intensifying competition from Asia, is seen by some as an attempt by CEO Oliver Blume to challenge the company's long-standing corporate structure and the significant influence of labor and the state of Lower Saxony, which holds a blocking stake due to the Volkswagen law.
The Volkswagen law effectively limits management's ability to close plants. However, creating separate entities for passenger cars and components could potentially sidestep these constraints. This potential spin-off faces strong opposition from unions, with IG Metall calling such plans an 'attack on the VW law.'
Some investors and analysts believe such a transformation is necessary for the company's survival, citing its shares trading near 16-year lows and the imbalance between its market value and the sum of its assets. The company might follow a path similar to Siemens in streamlining its operations to unlock value, potentially isolating weaker operations into a 'bad bank' structure.
However, any spin-off would require over 80% shareholder approval, giving Lower Saxony a de facto veto. The state's premier, Olaf Lies, has indicated he would not support measures that weaken worker influence, suggesting alternative ideas like shifting production of China-focused models to Germany.