BERLIN — German political leaders are responding to Volkswagen’s bombshell plan to slash 100,000 jobs — potentially one of the largest corporate layoffs in history — with predictable pledges to prevent the cuts, even as Germany’s economic reality grows darker.
That sets up a clash between VW’s increasingly aggressive corporate management and the politicians and unions that sit on the automaker’s supervisory board — and who have the power to block the plans. It’s a fight that ties the survival of Chancellor Friedrich Merz’s ever-more-unpopular coalition government to Germany’s increasingly bleak and potentially inescapable economic reality.
VW’s push to cut nearly one in six workers and shut down four German plants is the most poignant sign yet of the growing desperation of Germany’s manufacturing sector and its once-vaunted car industry, which have been hit particularly hard by competition from China and U.S President Donald Trump’s tariff wars.
The plan also shows that the problems inside Germany’s largest and most iconic automaker are even deeper than previously acknowledged — and that Chief Executive Oliver Blume is growing more forceful in his push to restructure the company and cut costs.
Leaders of the parties in Merz’s coalition vow to resist the plan, and because Lower Saxony — home to VW’s headquarters in the city of Wolfsburg — is the company’s second-largest voting shareholder, they have considerable power to try to stop it.
“The primary goal is to preserve the production sites of German manufacturers and to safeguard jobs,” Stefan Kornelius, Merz’s spokesperson, said Monday.
The news of VW’s plan to cut 100,000 jobs, first reported Friday by Germany’s Manager Magazin and expected to be presented to VW’s supervisory board in July, could hardly have come at a worse time for Merz’s weak coalition government — consisting of the chancellor’s conservatives bloc and the center-left Social Democrats.
The far-right Alternative for Germany (AfD) party — which has been hitting Merz’s coalition hard over the shedding of industrial jobs — holds a considerable lead over the chancellor’s conservatives in national polls — and is even further ahead in two state elections set for September in AfD strongholds in the former East Germany.
“Germany’s industrial base is crumbling at a dramatic pace right before our eyes,” said Alice Weidel, one of the leaders of the AfD, in a statement on Monday. “Even long-established companies are fleeing the economic mismanagement of this federal government.”
How far will VW go?
Because of VW’s unique corporate structure — and its partial ownership by the state of Lower Saxony — politicians and workers’ representatives have an outsize role in how the company is run. The state, with its large number of factory laborers, is also one of the few remaining strongholds for the SPD, a party that has traditionally had close ties to labor unions.
Olaf Lies, the SPD premier of Lower Saxony, sits on the supervisory board, along with the deputy state premier, Julia Willie Hamburg, a politician of the center-left Greens. Both have vowed to resist VW’s cost-cutting plans, and argue that its management instead needs a better plan to recapture lost market share.
“Our task must be to ensure that we don’t seek solutions through simplistic measures like ‘We’ll lay off employees or close locations,’” Lies told public broadcaster ZDF on Sunday. “We have to be competitive; we have to be technological leaders. And we also have to be able to secure and capture markets again. And personally, that’s what I expect from the executive board of a company like this.”
VW’s supervisory board would need to approve the reported layoffs and factory closures with a vote scheduled for July 9, according to the Manager Magazin report.
But representatives of the workers’ side and state politicians currently hold a majority of 11 out of 19 votes on the supervisory board. It therefore appears unlikely that the proposed plans will be approved without significant amendments or the inclusion of additional safeguards for workers.
The question will be how far VW’s management is willing to go in confronting politicians and trade unionists over its cost-cutting drive.
One of the most potentially explosive elements of VW’s reported plan is the possible spin-off of at least parts of the company into a separate entity. Experts say management may be seeking to create a corporate structure that would give it greater freedom to decide the future of factories and jobs, without the constraints of state ownership or trade union representation. Under the current law regulating VW’s governance model, management would need a two-thirds supervisory board majority to close one of its western German factories.
“It would be very radical,” Helena Wisbert, professor of automotive economics at Ostfalia University of Applied Sciences, said of a possible spinoff attempt. Wisbert said such a step would be extremely difficult to pull off — in great part because the current supervisory board would have to approve a spinoff. Still, she added, if such a step were truly under consideration, “it would really show just how intense the pressure to cut costs is right now.”
In an emailed statement to POLITICO sent on Friday, VW said it would “not comment on internal, confidential documents,” but added that “the entire Group — including its brands and subsidiaries — must undergo a profound transformation. To this end, the Group Executive Board has been working intensively over the past few months on a strategic plan for the company’s restructuring.”
VW’s woes became clear in 2024, when management announced a plan to close three factories in Germany for the first time in the automaker’s then 87-year history. But after marathon negotiations at the end of that year — which labor unions hailed as a “Christmas miracle” — factory closures were averted. Both parties agreed that 35,000 jobs would be cut by 2030.
But as the company’s outlook soured, VW announced this March it would increase job cuts to 50,000 by 2030 — an announcement met with relatively muted reaction. Now, plans to cut double that amount are facing far stiffer resistance.
“As a state, we have a clear expectation that VW management will put forward a viable plan for the future,” Grant Hendrik Tonne, the SPD economy minster of the state of Lower Saxony, told POLITICO. “Plant closures are not a plan for the future and are therefore unacceptable.”
Romanus Otte contributed reporting.
