3 days ago
Volkswagen layoffs: Automaker's plan to cut 35,000 jobs on track, 20,000 agree to end contracts early
Global automaker Volkswagen plans to lay off 35,000 jobs in Germany by the year 2030 as part of the company's cost-cutting program amid the ongoing Trump tariffs looming over the German automotive industry, reported a local news portal, Bild, on Tuesday, 3 June 2025.
More than 20,000 workers at the core of the Volkswagen brand have agreed to end their contracts early, taking a voluntary retirement, according to the news portal's report, citing a works council meeting at Volkswagen's Wolfsburg headquarters.
The job cuts are expected to be concentrated at German plants of the automaker, and the company aims to carry out the reductions in an 'acceptable manner,' with those affected agreeing to the terms.
The German automaker plans to give every employee affected by the cost-cutting measure based on their length of service. The company is likely to pay up to $400,000; however, the company did not provide any information on the total amount of severance payments, reported the news portal, citing the company's staff meeting on Tuesday.
Along with the job cuts, the company will also reduce the number of apprenticeships offered annually from 1,400 to 600 starting the year 2026. These cost cuts, along with the massive layoffs, will likely save the German automaker nearly 1.5 billion euros every year in labour costs, as per the news report.
Not just a voluntary resignation, nearly 130,000 or 13 lakh employees in Volkswagen's core team are accepting a payment freeze. The company aims at a five per cent salary hike paid into a fund in two stages, which will be required to fund finance, among other things, flexible working time models
The news report also shed light on how these measures prevented the closure of the Volkswagen plants in Germany.
According to an earlier Reuters report citing the Ifo Institute, the German automotive industry deteriorated further in May 2025 after reporting a fall in the business climate index in the backdrop of the Trump tariffs from the United States.
'The confusion surrounding the U.S. tariffs is causing problems for the automotive industry in Germany,' Ifo sector specialist Anita Woelfl told the news agency.
The automakers are already battling the weak demand in the European market and tough competition from foreign brands. This led to Volkswagen, BMW and Mercedes-Benz to get into talks with the US government for a deal to ease the impact of tariffs.
Business expectations for May 2025 dropped to -28.3 from -25.2 points in April, while the business climate index was down to -31.8 points from -30.7 in the previous month, according to the agneyc report.
