Volkswagen Group's supervisory board unanimously approved a sweeping restructuring plan called 'Future Plan 2030' on the evening of September 3, according to a report from Chinese outlet Huxiu. The plan, described internally as the most far-reaching transformation in the group's history, will cut 100,000 jobs, halve the number of model lines and reduce configuration complexity by 75%.
CEO Oliver Blume said 'Volkswagen needs to permanently become smaller' and that the group requires a fresh start. The move marks a sharp reversal from decades of expansion that saw Volkswagen briefly become the world's largest automaker by sales in 2015, before the diesel emissions scandal triggered a crisis that ultimately cost former CEO Martin Winterkorn his job.
From growth-at-all-costs to radical downsizing
The plan crosses a threshold that five previous CEOs could not breach: cutting 100,000 jobs. Huxiu notes that the decision comes as Volkswagen faces the consequences of its aggressive push into electrification, which has not yet delivered the expected returns. The group's diesel emissions cheating scandal, which erupted in September 2015, forced Winterkorn to resign and cost the company billions in fines and buybacks. At the time, Volkswagen's operating margin collapsed to ¾%.
Winterkorn had taken over from Ferdinand Piech, the autocratic patriarch who had built Volkswagen into a sprawling empire by reviving Skoda and the Beetle, and acquiring Bentley, Lamborghini and Bugatti. Piech was forced out in April 2015 after a power struggle with Winterkorn, who then won the board's backing. But within months, the U.S. Environmental Protection Agency accused Volkswagen of cheating on diesel emissions tests, leading to Winterkorn's resignation and a €30 billion ($33 billion) hit to the company's market value.
The new plan, which Blume described as a 'permanent' downsizing, will reduce the group's model portfolio by half and cut configuration complexity by 75%. The goal is to streamline operations and cut costs as Volkswagen transitions to electric vehicles. 'Volkswagen needs a new beginning,' Blume said, echoing Winterkorn's resignation letter from 2015.
Lessons from the past
Huxiu's report draws parallels between the current restructuring and the fallout from the diesel scandal. Winterkorn had set an ambitious target in 2012 to reduce CO2 emissions by 30% by 2015, but engineers reportedly felt unable to tell him the goal was unachievable, leading to the manipulation of test data. 'If you reported bad news, you could expect an unpleasant scolding,' one former employee told Huxiu.
Now, with the EV transition proving more costly and slower than anticipated, Volkswagen is again being forced to confront hard truths. The 'Future Plan 2030' is the most aggressive cost-cutting measure in the group's 89-year history, and it signals that the era of growth-at-all-costs is over. Whether Blume can succeed where his predecessors failed remains to be seen.
