Volkswagen mass layoffs begin: 20,000 employees exit in £1.2 billion cost-cut drive

Volkswagen is moving forward with a large-scale job reduction plan, with at least 20,000 employees already opting for early redundancy, in a bid to save approximately £1.2 billion annually in operational and labour costs. According to Bild, a German newspaper, the decision aligns with the automotive giant’s broader strategy to cut as many as 35,000 jobs across its German factories by the end of this decade.

The report, based on a works council meeting held at Volkswagen’s Wolfsburg headquarters, indicates the job-cutting strategy is already well underway. Of the 20,000 workers who have accepted redundancy so far, roughly two-thirds have opted for partial retirement. The move comes as part of Volkswagen’s internal restructuring initiative aimed at enhancing cost-efficiency without resorting to factory closures.

The redundancy offers could soon be extended to workers born in 1969 and 1970, a move that may help the company meet its full job reduction target. This workforce streamlining forms part of an agreement negotiated between the company and the powerful IG Metall trade union.

In December, Volkswagen had initially announced its intention to cut 35,000 jobs, following what it called "intensive negotiations." The company also unveiled plans to reduce production capacity at its German sites to 734,000 units per year and implement new structural production methods. These changes, while significant, aim to maintain the operational presence of all its domestic plants.

Oliver Blume, CEO of Volkswagen Group, called the agreement with IG Metall an “important signal for the future viability of the Volkswagen brand.” He reiterated that the collaboration would ensure a more competitive and sustainable business model in the years to come.

The German newspaper Bild also reports that, despite the looming job cuts, a negotiated pay increase may be on the horizon. Members of IG Metall are expected to receive a bonus as part of the deal. In a gesture to balance cost savings with worker retention, Volkswagen is believed to have committed to avoiding plant shutdowns across Germany.

Daniela Cavallo, Chairwoman of the General and Group Works Council of Volkswagen AG, had earlier addressed employees at the Wolfsburg site, warning that the company had reached a point where it might need to “start the sell-off.” The final agreement appears to have averted that outcome, at least for now.

The cost-cutting initiative also includes plans to reduce apprenticeship opportunities significantly — from the current 1,400 to just 600 by 2026. While this aspect of the strategy has drawn concern, Volkswagen insists it remains committed to training and talent development through revised models of engagement.

This restructuring push comes at a time when the company is celebrating several key milestones in its electric vehicle (EV) journey. Most notably, Volkswagen recently produced its one millionth electric vehicle at its Zwickau plant in east Germany. The vehicle, an ID.3 GTX Performance in Kings Red Metallic, will soon be delivered to a customer in Bavaria.

The Zwickau facility is one of Volkswagen’s major EV production hubs and manufactures several electric models including the ID.3, ID.4, Audi Q4 e-tron, Q4 Sportback e-tron, Cupra Born, and the ID.5. Volkswagen has also unveiled three new EV concepts — the ID. AURA, ID. ERA, and ID. EVO — as part of its "In China, for China" strategy, which aims to cater to local consumer preferences with AI-enabled, automated driving solutions.

As Volkswagen continues its transformation into a leaner and more tech-driven automotive company, these redundancies mark a pivotal shift in how traditional car manufacturers are adapting to changing global market dynamics and internal cost pressures.