Volkswagen has announced plans for approximately 20,000 employees to voluntarily exit the company by 2030, as part of a sweeping cost-reduction strategy aimed at transforming its German operations and remaining competitive amid mounting global pressures.

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The job cuts, primarily affecting VW’s operations in Germany, are a central element of a broader initiative to streamline production and cut expenses in response to sluggish European demand and rising competition from Chinese automakers.

“Transformation in Motion,” Says VW

At a recent workers’ assembly held in Wolfsburg, Volkswagen board member and head of human resources, Gunnar Kilian, confirmed that the company’s transformation is advancing. “With tangible progress in reducing factory costs at Wolfsburg and socially responsible workforce reductions across our six German sites, we are accelerating our transformation,” Kilian told employees.

He added that voluntary exit agreements covering around 20,000 employees had already been finalized and will be implemented by 2030.

Mounting Pressures Drive Restructuring

The move comes as Europe’s largest carmaker wrestles with several challenges, including high operational costs, softening sales in its home market, and an increasingly aggressive push by Chinese electric vehicle (EV) brands into Europe.

In December, the VW brand reached an agreement with labor representatives to trim its German production capacity by over 700,000 vehicles annually and reduce its workforce by 35,000—amounting to nearly 25% of the brand’s domestic employees and about 12% of Volkswagen Group’s total German workforce.

The workforce reduction will be managed primarily through early and normal retirements, along with mutually agreed terminations. While most of the exits are expected to be retirees, VW has not disclosed how many employees will be leaving through severance packages. However, it did earmark €900 million in 2023 to fund those packages.

Volkswagen’s German workforce currently exceeds 120,000 for the VW brand alone.

Financial Pressures and EV Challenges

Volkswagen brand Chief Financial Officer David Powels also addressed employees, underscoring the financial pressures facing the automaker. He cited “excessive investment, low margins on electric vehicles, and a break-even point that remains too high” as critical factors necessitating the cost-cutting drive.

The restructuring is not limited to Volkswagen itself. Sister companies Audi and Porsche are also implementing job cuts as part of their own efforts to improve efficiency and reduce operational costs.

Volkswagen’s decision to reduce its workforce by 20,000 over the next five years marks one of the most significant moves in its recent history, aimed at safeguarding its competitiveness in a rapidly evolving automotive market. While the focus remains on voluntary exits and socially responsible measures, the restructuring underscores the high stakes facing traditional automakers navigating the transition to electric mobility and global market shifts.