The road ahead for Volkswagen's restructuring: Explained

BERLIN: Volkswagen CEO Oliver Blume may have got the green light from stakeholders for his turnaround plan, but he faces tough talks in Germany over job cuts and plant closures as well as fundamental questions over the automaker's US strategy.

Here is a guide to what is coming up next.

RETHINKING THE US AND CHINA


Volkswagen's supervisory board meets on Friday, with unresolved issues ranging from details of the restructuring to its strategy in the US, where the world's No.2 carmaker has lost billions of euros due to painful tariffs.

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Volkswagen must also settle the long-standing question of whether premium brand Audi should get its own US production site, which would require the blessing of the committee.

The German company also wants to pivot towards the most profitable US segments, such as pick-up trucks and large SUVs.

While half of the 50,000 additional job cuts are likely to occur in Germany, Volkswagen is restructuring elsewhere too.

It has already cut its workforce in China from 90,000 to 70,000 as it adapts to falling sales, with more expected and Chinese production facing 500,000 vehicles of capacity reductions.

NO STRIKES FOR NOW

Bound to a strike truce until January 1, 2027, Germany's top industrial union is seeking other ways to pressure management.

On September 30, IG Metall representatives are expected to discuss with management concerns that the overhaul could breach a 2024 labour agreement.

That deal ushered in a first wave of 35,000 layoffs in Germany, in return for employment guarantees until the end of the decade and investment in plants now on the chopping block.

Also Read: Volkswagen workers demand action as German auto jobs face cuts

Despite dropping their opposition to the broad plan at a board meeting three weeks ago, labour representatives and the state of Lower Saxony, Volkswagen's second-largest shareholder, are still fighting to stem local job losses.

Unions want the 25,000 planned German job cuts to be a starting point for negotiations, with a focus on cost rather than a numerical layoff target.

CRUNCH TIME FOR THREATENED PLANTS

Volkswagen will put together a European production plan by the end of June 2027, a key period for plants already at risk.

The company intends to remove more than 500,000 vehicles worth of capacity in response to persistently low demand, with the Emden, Zwickau, Hanover and Neckarsulm plants scheduled to close on a staggered basis from 2031 until 2034.

Solutions could include pivots to defence or Chinese partnerships, but no concrete plans have emerged so far.

There is also room for manoeuvre with working hours as the 2024 agreement says parties can agree a four-day week for workers if Volkswagen gets into financial difficulty.