VW plans to halve model lineup, cut capacity to 9M vehicles. No job cuts announced, even as reports of 100,000 layoffs circulate. Jefferies sees no progress on closures or headcount reduction.
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Volkswagen's management emerged from a tense boardroom meeting Thursday with a plan to shrink the carmaker's model lineup by as much as half and cut annual production capacity to 9 million vehicles. The company did not announce any job cuts, leaving the fate of as many as 100,000 workers and four German plants unresolved.
Europe's largest automaker will gradually reduce its model range over the coming years, focusing on the most profitable market segments, CEO Oliver Blume said in a statement. The new capacity target of 9 million vehicles compares with a pre-pandemic goal of 12 million.
"With our future plan, we are moving into the next phase of transformation by our own means," Blume said. "We are making the Volkswagen Group faster, more resilient and more competitive."
Volkswagen is considering the closure of four German factories: Hanover, Zwickau, Emden and the Audi facility in Neckarsulm, according to Manager Magazin. The restructuring could eliminate up to 100,000 jobs, more than double the 50,000 previously announced, and would mark the most radical overhaul in the company's nearly 90-year history, the report said.
German lawmakers and powerful labor unions have vowed to oppose the reported cuts. Volkswagen's General Works Council and the IG Metall industrial union have pledged to push back against both plant closures and job reductions. IG Metall organized a protest Thursday outside Volkswagen's plant in Zwickau.
Analysts at Jefferies said the rescue plan provided "limited new information" and "no indication of progress" toward an agreement on plant closures, a five-year investment plan or the additional headcount reduction of up to 100,000.
Volkswagen (VWAGY) shares traded 0.6% higher Friday morning. The stock is down more than 30% this year and recently traded at levels not seen since the summer of 2010. Gebhardt said the decline reflects a perfect storm of Chinese competition, tariffs and a lack of competitive product offerings.
"If you look at the stock price, it tells you a story," Henning Gebhardt, partner and fund manager at HollyHedge Consult, told CNBC's "Europe Early Edition" on Friday. "Volkswagen is in a perfect storm: Competition from Chinese competitors is very high so there's no real profit from China, you have tariffs, you have other competitors which are actually having a nice offering, which Volkswagen at the moment doesn't have, and then generally speaking, the auto industry is under pressure."
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