Volkswagen To Speed Up Restructuring As Workers Protest And Industry Pressure Mounts

Volkswagen is working to step up its restructuring programme as Germany’s automotive industry faces mounting pressure from high costs, weaker demand in China and intensifying competition from Asian car manufacturers. The announcement came on Monday as workers at Volkswagen, BMW and supplier Bosch staged protests across Germany over job cuts, likely production relocations and possible plant closures, Reuters reported. 

The protests followed Volkswagen’s latest profit warning, which further exposed the challenges facing the country’s car industry.

“I had hoped that the measures agreed in 2024 would ⁠already be sufficient. Unfortunately, that has not been the case,” Volkswagen brand head Thomas Schaefer was quoted as saying to employees at the company’s Wolfsburg headquarters.

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Schaefer said Volkswagen had little time to address the situation and would intensify its performance programme, with the company and employee representatives set to discuss the next steps.

“We have absolutely no time to lose and will therefore significantly step up our performance programme once again,” he said.

The Volkswagen Group has okayed a restructuring plan that includes a further 50,000 job cuts. The agreement with stakeholders helped avoid a direct confrontation with powerful unions, although worker representatives continue to press management and policymakers for measures to support Germany’s automotive sector.

Volkswagen works council chief Daniela Cavallo and IG Metall union leader Christiane Benner have called for stronger safeguards against what they describe as unfair competition from China. They have also sought more effective European Union subsidy policies and the continuation of phased retirement programmes.

“We expect corporate leaders and management teams to take responsibility for Germany as an automotive nation, for employees and for jobs,” Benner told workers at Volkswagen’s headquarters.

Volkswagen’s restructuring drive comes days after the group cut its 2026 profit margin outlook to a maximum of 1 per cent, compared with its previous guidance of 4 per cent-5.5 per cent. The company cited weaker conditions in China and higher retirement-related provisions, while also lowering expectations for Porsche.

The wider European automotive industry is dealing with excess manufacturing capacity, higher operating costs, US tariffs and growing competition from Asian carmakers. Volkswagen has also faced a sharp deterioration in profitability in China, once one of its most important markets.

The transition towards electric vehicles is adding another layer of pressure. Demand for EVs has grown, but these vehicles have generally generated lower profitability for established manufacturers, while Chinese rivals have gained ground in both China and overseas markets.

IG Metall representative Horst Ott said German manufacturers and suppliers had fallen behind in areas including electric mobility, digitalisation and battery technology.

The combination of workforce reductions, production restructuring and pressure on the traditional combustion-engine business now places the German automotive industry at a significant transition point. 

For Volkswagen, the immediate challenge is to reduce its cost base while adapting its product and technology strategy to a market increasingly shaped by electrification and Asian competition.