Volkswagen Group CEO Oliver Blume sent a memo to staff this week confirming the company may cut up to 100,000 jobs worldwide — double the 50,000 figure the company had previously floated. That's not a restructuring plan. That's a controlled demolition of the largest automaker in Europe, conducted in broad daylight.
From €22 Billion to 'We Have a Problem'
Here's how fast things fell apart. The BBC reports that Volkswagen Group posted an operating profit of €22.6 billion in 2023. By 2024 that had dropped to €19.1 billion. Last year it cratered to €8.9 billion. In three years the company lost more than half its operating profit. That is not a bad quarter. That is a structural collapse.
Blume's memo to staff, which has been widely reported, did not sugarcoat it. He told employees that the Group's costs are currently running 20% higher than rival businesses and that cuts would need to go even deeper than what had already been announced. 'We need to become more efficient, more robust and simpler,' he wrote. 'We must reduce our costs.' Hard to argue with the logic. Extremely unpleasant to be one of the 100,000 people it applies to.
China Ate Their Lunch and Brought Their Own Chopsticks
The biggest gut punch has been China. VW used to print money there. According to the BBC, sales in China for the first six months of this year are down 26% compared to the same period last year. That is not a trend. That is a collapse. Chinese brands have moved aggressively into international markets, introducing new technologies at lower production costs than European rivals can match.
This is the core problem facing every legacy Western automaker right now, and Volkswagen is just the most prominent casualty. BYD and its competitors are not playing catch-up anymore. They have lapped the field on EV technology in key markets, and they can build the cars cheaper. When your biggest market disappears and your most threatening competitors can undercut your price point while outperforming your product, the spreadsheet gets ugly fast.
Trump's Tariffs Kicked Them While They Were Down
As if the China problem were not enough, the BBC also reports that US sales fell more than 7%, partly due to the impact of tariffs on car imports introduced by the Trump administration. American consumers did not stop wanting cars. They got priced out of imported ones by a trade policy designed, in theory, to protect domestic manufacturing.
Whether that theory is working for American workers is a separate conversation. What it is definitely doing is adding another layer of financial pressure onto a company that was already bleeding. VW is getting squeezed from both ends: cheaper competition eating market share in the east, punishing tariffs closing off growth in the west.
Four Factories Still Have No Answer
Blume also confirmed in the memo that the company has been 'unable to confirm' alternative uses for four German factories previously threatened with closure. Two of them, in Zwickau and Emden, are dedicated to electric vehicle production. The other two are in Hanover and Neckarsulm. All four are considered expensive to run. No announced plans mean those workers are waiting on a verdict with no timeline.
This comes after a brutal negotiation in late 2024. The BBC reports that after threats of mass strikes, VW reached a deal with German trade union IG Metall to cut 35,000 jobs at its core VW brand by 2030, with another 15,000 gone at subsidiary brands. That deal was sold as the hard-but-necessary compromise. Now the company appears to be going well past it. Last week saw widespread protests at Volkswagen sites across Germany ahead of a supervisory board meeting.
Is This a Negotiating Tactic or a Preview of Hell?
Some industry analysts have floated the theory that VW deliberately publicized the 100,000 figure as a negotiating move, suggesting to Agence France Presse that the final number of cuts is likely to land lower. The idea being: tell the union you're cutting 100,000, settle at 60,000, and everyone calls it a win.
Maybe. That kind of scorched-earth anchoring in labor negotiations is not unheard of. But it is a deeply cynical game to play with people's livelihoods, and it requires a level of institutional trust that VW's workforce may not have left to give. When you blew past your last announced number by 50,000 jobs in a single memo, the workers outside the gates are not exactly in a 'give management the benefit of the doubt' mood.
The Dingo Take
Let's be honest about what is happening here. Volkswagen is not some scrappy startup that bet wrong on a product cycle. This is a 89-year-old company, the largest automaker in Europe, home to Porsche, Audi, Skoda, SEAT, and the namesake brand that basically taught the postwar world what a car was supposed to cost. And right now it is in genuine existential trouble. The combination of Chinese competition, collapsing China sales, Trump tariffs eating into US revenue, and bloated production costs has created a perfect storm that no amount of restructuring memos can fully talk its way out of.
The 100,000 figure, negotiating tactic or not, tells you everything about the severity of the moment. You do not throw that number into a staff memo unless you need people to understand that the situation is dire. Oliver Blume is not trying to manage morale here. He is trying to manage a crisis.
And yes, some of this is Trump's tariff policy doing real, measurable damage to a major employer with ripple effects across a European economy that is already struggling. That is not spin. That is the number: 7% sales drop in the US, attributed in part to import tariffs. The people who told you tariffs were going to bring manufacturing jobs back home should be required to read that line out loud, slowly, in front of the workers in Zwickau whose factory still has no confirmed future.
