Volkswagen Board Rejects CEO's 100,000-Job Cost-Cutting Plan

Board Opposition

Things aren't looking good for Volkswagen at this time. The company's board has recently rejected CEO Oliver Blume's restructuring plan. VW is in dire need of profitability, as sales continue to fall and external factors keep the German auto group in the red.

Volkswagen's board rejected Blume's restructuring plan, 12 to 19 votes. The decision was made on July 9, 2026, in Wolfsburg, Germany. Considering what the restructuring entailed, it's not surprising that the plan didn't go through, as 10 of the 19 board seats were held by labor representatives, and the state government of Lower Saxony is the company's second-largest shareholder.

Automotive News has the report, which also includes a quote from the CEO saying that the company "is taking responsibility for the company's sustainable future - at a time when the automotive industry is under intense pressure worldwide," as stated by Oliver Blume in a July 10 statement. However, that statement wasn't taken well, as even VW's workforce and council turned against Blume altogether.

Challenges and the Rejected Plan

Volkswagen is restructuring amid mounting challenges. Sales and profits in China have declined amid intense competition from local brands led by BYD, while U.S. tariffs have hurt earnings at Audi and Porsche. High production costs in Germany have also squeezed margins, further pressuring the company's profitability. The restructuring plan was made in response to these challenges, but it appears that VW's top brass might have to go back to the drawing board for this one.

In its proposed plan, Volkswagen would cut about 100,000 jobs, close some factories in Germany, and axe about half of its lineup while keeping the models that are actually profitable. Apart from that, the plan would've also considered separating the Volkswagen brand from the rest of the Volkswagen Group.

The brand's initial gamble in China paid off in the early years, spurring profitability and making it a preferred brand among Chinese auto buyers at the time. Now, however, times have changed, and local players like BYD have swept the rug from under Volkswagen in the region. It's unlikely that the brand will recover its crown or profitability in the country, for that matter.

Apart from that, Volkswagen's market valuation remains at a decade-low of $41.1 billion, which is hurting investors, and its stock is trading at not much more than its net cash position, so not only is Volkswagen hurting its investors, it's also apparently hurting its workforce. More drama follows below.

The Backlash

Apart from the rejection, there was also a ton of backlash directed at VW's current CEO. Remember, a good chunk of VW's board are labor representatives, and they didn't take too kindly to the proposition of a restructuring plan that involved cutting 100,000 jobs.

Daniela Cavallo, the chairwoman of VW's works council and a supervisory board member, issued an ultimatum to Blume, calling on him to explain himself to the company's workforce. The thing is, Blume's restructuring plan stoked fear of job losses within Volkswagen's ranks, and the board demanded that Blume and his team explain themselves and the extent of the plan-which they (Blume's team) didn't do.

On July 11, 2026, the works council reacted, distributing a special edition of its newspaper to the workforce, saying that Blume would have to answer to staff at meetings during the summer break. This is a huge fall from grace on Blume's part because when he was appointed CEO, he was initially "for the people," according to the VW work council's account. Now, you could say that none of VW's workers sees him that way anymore.

Now that the restructuring plans are a no-go, and the board denied the move to cut jobs, close factories, and more, Volkswagen may resort to cutting costs one by one and little by little. The process could take several months, but repairing the reputation of its CEO could take years.

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This story was originally published July 12, 2026 at 1:58 PM.