Volkswagen may cut 50,000 more jobs, CEO memo confirms

Volkswagen has confirmed for the first time what had circulated for weeks as speculation: the automaker is looking at cutting up to 100,000 jobs. CEO Oliver Blume told staff in an internal memo, seen by Reuters, that roughly 50,000 additional positions may need to go to close a competitiveness gap with rivals.

However, the figures given by Blume provide an idea of what is behind the current layoffs. The company estimates that it has a 20% cost disadvantage compared to other companies, which it cannot balance through its current plan. 

As it had committed itself to a reduction of 50,000 jobs, including Porsche and Audi, Blume stated that there was a need for an additional "theoretical deduction" of 50,000 jobs.

"We are currently assessing across all brands, companies and regions how many adjustments are actually necessary and feasible," Blume wrote without specifying any exact figures.

The pressure behind the memo isn't new. Volkswagen has been absorbing billions of euros in US tariff costs while facing intensifying competition in China, long one of its most important markets.

Domestic Chinese automakers have been taking market share at Volkswagen's expense, and the company's German manufacturing base has come under scrutiny for being too costly to sustain at current output levels.

There had been demands from workers for management to give an explanation about the extent of their plans, and Blume gave his proposal to Volkswagen’s supervisory board on Thursday.

According to sources related to the discussions, the labour unions sitting in the supervisory board turned down the proposal, which apparently involved layoffs and possible closure of four plants.

This is the first time that Volkswagen responded to rumours about 100,000 layoffs, having previously remained silent regarding the figure.