US Tariffs Impact: Volkswagen Layoffs Automaker’s Plan to Cut 35,000 Jobs

According to a news portal, Bild. Volkswagen, one of the leading global automakers, has initiated a major restructuring plan aimed at reducing labour costs. As part of this effort, the company is progressing with its strategy to cut 35,000 jobs in Germany by 2030.

Volkswagen's Layoffs: Workforce Restructuring Plan

Volkswagen has begun implementing its large-scale job reduction strategy, targeting a total of 35,000 roles across its German operations by the end of this decade. The move is part of a broader cost-saving initiative and comes amid growing global economic challenges, including uncertainty around trade policies.

The restructuring is being conducted through a voluntary retirement programme. According to a recent internal staff meeting at the company’s Wolfsburg headquarters, over 20,000 employees have already agreed to terminate their contracts ahead of time. These voluntary exits represent a significant step in executing the company’s broader workforce reduction plan.

Severance Packages and Cost-Saving Strategy

The company has reportedly offered severance packages to affected employees, with the amount determined by the length of service. Although Volkswagen did not disclose the total severance payout, some packages may reach as much as $400,000.

Beyond job cuts, Volkswagen also announced a substantial reduction in the number of annual apprenticeships, which will fall from 1,400 to 600 starting in 2026. These efforts are expected to reduce labour costs by approximately €1.5 billion each year, according to internal estimates cited in the local news report.

Read More: India Plans Retaliation After US Dismisses WTO Tariff Notice. 

Payment Freeze and Salary Adjustment Initiative

In addition to workforce reductions, Volkswagen is also introducing a payment freeze that will affect approximately 1,30,000 employees. Under this measure, a planned 5% salary increase will be redirected into a special fund.

The company intends to use this fund to support flexible working time arrangements and possibly other internal financing needs. This strategy is part of a broader approach to maintain operational stability while minimising plant closures.

US Tariff Impact and Industry Pressures

The restructuring comes at a time when the German automotive industry is facing headwinds due to uncertainty over tariffs imposed by the United States. According to the Ifo Institute, the business climate in the sector has declined further in May 2025, with business expectations dropping sharply.

Automakers, including Volkswagen, BMW, and Mercedes-Benz, are reportedly in discussions with the United States to mitigate the impact of the tariffs. The ongoing uncertainty has compounded existing challenges such as sluggish European demand and stiff competition from global brands.

Conclusion

Volkswagen’s ongoing workforce changes reflect a strategic response to external economic pressures and internal restructuring needs. By offering voluntary exits, managing salary expectations, and cutting future training costs, the automaker aims to preserve financial stability and prevent more drastic measures such as plant closures.

These developments illustrate how large manufacturing firms are navigating a complex environment shaped by trade tensions, market dynamics, and long-term cost efficiency goals.

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