Volkswagen, Europe’s largest automotive group and a key figure in German industry, has announced a major restructuring plan that could result in up to 100,000 job losses and the closure or repurposing of several factories in Germany. The announcement, made following a supervisory board meeting on July 9, represents the most significant peacetime shake-up in the company’s history.

Arno Antlitz, Volkswagen’s chief financial officer, emphasized the need for a fundamental realignment of the business model. He cited insufficient cost reductions amid challenging economic and geopolitical conditions, including declining sales in China, increased competition from Chinese car manufacturers in Europe, and tariffs imposed by the United States. These factors have combined with the company’s costly transition toward electric vehicles, which has so far fallen short of expectations.

Chief Executive Oliver Blume presented detailed plans for the overhaul, which affects Volkswagen’s broad portfolio of brands, spanning volume manufacturers such as Skoda and Seat, as well as premium marques including Audi, Porsche, Lamborghini, and Bentley. The company produces around 10,000 vehicles annually at its Crewe plant in the United Kingdom.

Blume’s strategy faces pushback from diverse and sometimes conflicting stakeholders. Legacy shareholders from the Piëch and Porsche families, the government of Lower Saxony where Volkswagen is headquartered, and trade unions represented on the supervisory board are all closely engaged in discussions. The IG Metall union, which is particularly influential in the German automotive sector, organized demonstrations at 20 Volkswagen plants nationwide in response to the restructuring proposals.

Union leaders have vehemently opposed any potential plant closures or workforce reductions. Christiane Benner, IG Metall president and deputy chair of the Volkswagen supervisory board, warned against job cuts, insisting that the company and policymakers work together to maintain full production capacity and protect workers from unfair foreign competition. She described the public speculation about closing up to four German factories as irresponsible and expressed concern about the uncertainty facing employees.

Among the facilities potentially affected is the Zwickau plant in eastern Germany, Volkswagen’s first dedicated electric vehicle factory. There has also been speculation that Volkswagen might lease one facility to the Chinese automaker BYD or transform another, such as the Osnabrück plant, into a defense production site, possibly in partnership with the Israeli firm Rafael Advanced Defense Systems.

Discussions also included proposals to streamline the company’s complex structure by potentially separating the core Volkswagen brand from volume and premium divisions. Measures aimed at reducing operational complexity, regionalizing production and development, and optimizing ownership were outlined as key goals.

Daniela Cavallo, chair of the Volkswagen works council, called for a comprehensive long-term strategy focusing on technological innovation and product planning tailored to different markets rather than workforce reductions. She urged policymakers in both Germany and the European Union to implement industrial policies that protect the European automotive market against international competition, referencing the use of subsidies and tariffs by the United States and China.

Volkswagen’s supervisory board confirmed it had already begun implementing initial elements of the future plan, but the company faces significant resistance from unions and calls for government intervention to safeguard the country’s automotive sector and its workforce.