By Matt Underwood It appears Volkswagen’s CEO is setting the stage for a massive workforce reduction, with reports from Manager Magazin indicating a target of cutting around 100,000 jobs as part of a significant company overhaul. This is a stark figure, especially when considering Volkswagen employs approximately 650,000 people globally. The sheer scale of such a layoff suggests a deep and perhaps fundamental restructuring is underway.
The current state of Volkswagen’s stock performance, where $100 invested five years ago would now be worth only $35, points to a prolonged period of struggle, not a sudden downturn. This consistent decline, even before accounting for inflation, paints a picture of a company in what some might describe as a managed decline, a concerning observation for such a historically dominant player in the automotive industry.
Many observers seem to believe that a critical turning point for Volkswagen was the discontinuation of models like the “Up!”. This move, along with a perceived strategy of simply upselling existing products in the face of escalating foreign competition, is seen by many as a significant misstep by management. The consequences of these decisions appear to be manifesting now, leading to this drastic proposed overhaul.
There’s a notable sentiment that the responsibility for this situation lies squarely with upper management, not the average worker. The massive investments made in R&D to cheat emissions tests, the subsequent fines, and the slow response to the electric vehicle (EV) and battery technology revolution are all cited as managerial failures. The push for EVs without adequate research, leading to quality issues because they were essentially built like internal combustion engine (ICE) cars, is another frequently mentioned point of criticism. This led to vehicles that were perceived as overpriced and lagging behind competitors, particularly from China, which are often lauded for their integrated in-house manufacturing of EV components.
The current pivot back towards ICE vehicles, just as EVs are gaining mainstream traction in Europe, is also viewed as a symptom of top-level indecisiveness. This leaves Volkswagen in a precarious position, with predominantly ICE production lines and a reliance on external suppliers for EV parts, driving up costs and impacting product quality compared to competitors with more localized supply chains. Even with European tariffs providing some protection, the underlying issues are seen as persistent.
A recurring theme in the commentary is the lack of accountability at the highest levels of Western corporations, with Volkswagen serving as a prime example. The argument is that while CEOs and management teams receive substantial bonuses and face no personal repercussions for strategic blunders, it is the average worker who ultimately bears the brunt of these decisions through job losses. This stark contrast between the rewards for failure at the top and the consequences for those on the ground is a significant point of contention.
The idea of Volkswagen producing affordable EVs, perhaps a modern electric “Beetle,” to cater to the mass market, the “Volk” it’s named after, is frequently brought up. The current strategy of offering premium-priced electric vehicles, like the electric van at a $70,000 price point instead of more accessible options, is seen as out of touch with the needs and purchasing power of the average consumer.
Despite the proposed job cuts, there’s a sense of bewilderment that Volkswagen, still a dominant force in the market and a supplier for other manufacturers, is seemingly losing ground. The leverage this position should afford them appears to be underutilized, leading to speculation that this is simply a “leaner” restructuring driven by losses to Chinese competition, rather than a necessary response to genuine financial distress.
The perception is that management is quick to claim bonuses, even in the absence of profit, while simultaneously pushing for worker layoffs. This creates a paradoxical business model where the company’s problems are solved by making the cars even more expensive and then firing the people who would buy them, a cycle that appears unsustainable.
Some suggest that a more targeted approach to cost-saving might be more effective, humorously suggesting the elimination of entire departments like Audi’s design, VW’s quality control, and Porsche’s pricing teams, implying they could be replaced by much cheaper alternatives. Even with significantly increased compensation for these hypothetical employees, the savings for the company would be immense, highlighting the perceived disconnect between executive compensation and the proposed workforce reduction.
The call for the CEO and their leadership team to be included in any layoffs is a strong expression of the belief that they are the primary architects of the company’s current predicament. However, the general expectation is that such accountability is unlikely, with suggestions that executive bonuses will likely be prioritized over job security. This sentiment extends to concerns about future projects, like the new Scout Truck and SUV, and whether they will be built on Volkswagen’s struggling EV platforms.
The history of Volkswagen, including their past involvement in emissions testing scandals and the subsequent costly recall of millions of functional cars, is a persistent shadow. The argument that such “criminal policies” should prevent a return to profitability is a strong one, leading some to declare “Bye Felicia!” to the company’s future prospects. The absence of headlines about job creation, contrasted with these massive layoff plans, further fuels cynicism about executive motivations, with a veiled reference to justifying extravagant bonuses.
The influence of institutional investors is also questioned as a potential driver behind these drastic measures. The idea that the focus has shifted towards firing people and replacing them with AI, while not entirely serious, reflects a broader anxiety about the future of work in the automotive sector. The rapid materialization of billions for board members, immediately followed by proposals for massive job cuts, is a particularly galling aspect for many.
There’s also a significant concern that these plants could be acquired by companies like BYD, which might then employ the existing workforce, effectively highlighting a perceived national or European failure to maintain its own industrial base. The current market valuation of Volkswagen, which is significantly lower than tech giants like Nvidia, raises questions about the future viability and market position of the company. While earnings might not be disastrous, the bleak outlook for their future product strategy is a significant concern.
The German approach to industrial relations, characterized by strong worker representation and laws that have historically resisted modernization efforts, is cited as a factor. This is seen as contributing to Volkswagen employing significantly more people per car than competitors from Japan, as workforce and political considerations have often hindered plans that would lead to job reductions. The “Euro standard” is also mentioned as a contributing factor to the struggles of European car manufacturers.
The proposed plant closures in Hanover, Zwickau, and Emden, along with Audi’s Neckarsulm site, could put over 45,000 jobs at risk, adding to the 50,000 job cuts already agreed upon with unions in late 2024. This suggests a doubling down on the initial agreement, a move that has understandably drawn strong reactions. The reduction in trunk space of models like the Tiguan to upsell to larger, more expensive vehicles is seen as another example of strategic decisions that alienate customers.
The lack of a truly competitive, affordable small electric vehicle, like the discontinued “Up!”, is a significant point of frustration. The delay in bringing such a model to market, despite the perceived simplicity of EV manufacturing compared to ICE, is seen as a critical failure that contributed to the company’s current troubles. Historically, smaller, more affordable vehicles were a cornerstone of Volkswagen’s success, and their absence in the EV era is a missed opportunity.