Volkswagen flags 50,000 job cuts across group

Volkswagen's supervisory board has approved a transformation plan on Thursday that will include cutting another 50,000 jobs in its attempt to counter painful tariffs, overcapacity, and aggressive Chinese rivals.

The plan, the most extensive restructuring in Volkswagen's 89-year history, includes exploring alternatives for four German plants that will eventually run out of models during the next decade.

It also averts a major clash with unions by putting the scenario of an extraordinary general meeting on the backburner, a scenario that was considered by management to push through its plans against workers and Volkswagen's second-largest shareholder, Lower Saxony.

The deal will result in a simplification of Volkswagen's conglomerate structure and limit the influence of the group's supervisory board, on which unions and Lower Saxony hold a majority, on key decisions.

"This is a strong signal for the future of the Volkswagen Group. We are taking responsibility for our entire workforce, for our partners and for industrial jobs worldwide," CEO Oliver Blume said in a statement.

Frankfurt-listed Volkswagen shares closed 7.9 per cent higher following the news, reflecting relief over what sources said could have escalated into an unprecedented crisis at Europe's largest automaker.

Industry analyst Ferdinand Dudenhoeffer said the next 10 months would see discussions over the future of Volkswagen's plants in Emden, Zwickau, Neckarsulm and Hannover, which all face a staggered phase-out from 2031 onwards.

The deal follows weeks of tense negotiations that pitted the board and majority owner Porsche against unions and Lower Saxony, with the idea of a spinoff of Volkswagen's passenger car and components businesses no longer being mentioned.

"A certain sense of calm is returning, but it is far from 'peace'. In politics, one would call it a 'ceasefire'. That's a good thing, because now the focus can be on the business," Dudenhoeffer said.

The "Future Plan" comes as Volkswagen faces pressure from all sides, squeezed between US import tariffs and a weak Chinese market, the world's biggest car market and once the group's cash cow.

Volkswagen said "a further fundamental adjustment of the global workforce capacity" was needed, saying this would include a reduction of around 50,000 positions worldwide, in addition to a 50,000-job reduction already underway.

The company did not provide further details on the timing of the workforce reduction or how the cuts would be distributed across its brands and regions.