Volkswagen is planning to cut 100,000 jobs and end production at four German plants over the coming years, according to a report by Manager Magazin. The cuts would affect about 15% of the company’s workforce.
The reported restructuring plan also calls for reducing Volkswagen’s planned investment by about 15%, to just over 130 billion euros ($148.2 billion) over the next five years. It would also end production at plants in Hanover, Zwickau and Emden, as well as Audi’s Neckarsulm site.
Volkswagen CEO Oliver Blume presented the plans to senior executives earlier this week in an effort to build support for the sweeping cost-cutting measures, which are expected to face resistance from labor unions and the state of Lower Saxony, the automaker’s second-largest shareholder.
Blume and Chief Financial Officer Arno Antlitz also plan to fundamentally restructure the 89-year-old company, including spinning off the core Volkswagen brand and its parts operations into separate entities, Manager Magazin reported.
“The entire Group—including its brands and subsidiaries—must undergo profound change,” a Volkswagen spokesperson told CNBC while declining to comment on “internal, confidential documents.” The spokesperson added that decisions would be made and approved by the relevant governing bodies, according to a Google translation.
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Investors appeared skeptical of the reported plans. Volkswagen shares fell 3.4% to a 16-year low by 1:35 p.m. GMT on Friday.
“The high costs are merely a symptom, not the cause. They do not address the root cause, which is weak sales,” Ingo Speich of Volkswagen shareholder Deka told Reuters.
“VW must bring attractive products to market that are in high demand; that would put an end to the debate over costs.”
Volkswagen’s General Works Council and German industrial union IG Metall pledged to oppose the reported job cuts and plant closures.
“If such plans were to be pushed forward, we would prevent them with all our might,” they said in a joint statement, according to a translation.
Volkswagen employs more than 650,000 people across its brands, including Audi, Bentley, Skoda, Seat and Cupra. The company has been hit hard by rising competition from Chinese automakers and has struggled to transition from internal combustion engine vehicles to electric cars.
If carried out, the layoffs would mark one of the biggest restructurings in Volkswagen’s history. The scale of the cuts has drawn comparisons to General Motors’ downsizing before and during its 2009 bankruptcy, as well as its restructuring in the early 1990s, when it eliminated as many as 74,000 jobs over four years and closed or idled 21 plants.