Volkswagen AG directors approved a corporate restructuring program that will reduce total employment by up to 50,000, as the automaker aims to improve its global competitiveness and address current market conditions, including increased tariff costs. In its “Future Plan,” VW also intends to reduce its manufacturing footprint by closing four plants while streamlining its output to about 9 million vehicles per year.

VW’s supervisory board voted unanimously to implement the Future Plan, which also includes a commitment of €135 billion (approx. $157 billion) combined in capital expenditure and R&D from 2027 through 2031.

The Plan also pledges those investments will be confined to core technologies, scaling down the overall product portfolio to maximize shared vehicle architectures; funding AI-supported development methods across the entire engineering chain to accelerate production timelines and cut software complexity; and preserving a balance of investments in EV/battery tech while preserving capital flexibility for hybrid and conventional drive systems.

By 2035, the automaker plans to cut the number of models it offers across the Volkswagen, Audi, and Porsche brands by about half from the current total.

“This is a strong signal for the future of the Volkswagen Group,” according to CEO Oliver Blume. “We are taking responsibility for our entire workforce, for our partners, and for industrial jobs worldwide. Over the coming years, we will invest a three-figure billion sum to make our iconic brands even more attractive, stronger and more competitive."

The plan was precipitated by declining profits (down by more than -50% year-over-year in the first half of 2026) and operating margins. VW also has lost significant market share in China, losing out to lower-priced EVs available from domestic automakers, which are also gaining acceptance in the EU.

Rising global trade tensions, regulatory standards, and particularly U.S. tariffs on imported vehicles have cut into VW’s export profits.

All of the four plants to be closed - three Volkswagen and one Audi assembly operations - are in Germany, according to unconfirmed reports. The group’s European operations have been identified for having higher labor costs and contribute to regional overcapacity.

Volkswagen’s U.S. operations (including its Chattanooga, Tenn., assembly plant) are considered among the profitable elements of the overall portfolio.

The job cuts (which will include management positions) will be implemented by 2030, and are meant to achieve structural efficiency across the organization. Early in 2025 VW negotiated a 50,000-jobs downsizing program with labor unions in Germany, mainly through attrition, early retirements, and voluntary exits. In June, at the 2026 annual meeting CEO Blume announced that VW aimed to reduced overall employment by 19,000 by year’s end.

The reductions targeted in the Future Plan aim to raise the overall workforce downsizing to 100,000 positions.