Volkswagen is weighing up to 100,000 job cuts as Europe’s biggest carmaker accelerates a sweeping overhaul after admitting the manufacturing model that underpinned decades of German industrial success can no longer compete in a market reshaped by Chinese rivals.

The German automotive giant is reportedly considering almost doubling previously announced workforce reductions while shutting four factories, as chief executive Oliver Blume battles slowing electric vehicle demand, US tariffs and intensifying competition from lower-cost Chinese manufacturers.

If approved, the proposals would take Volkswagen’s planned workforce reduction to around 100,000 employees by 2030 – roughly one in six of its global workforce – making it one of the biggest restructurings in automotive history.

According to Manager Magazin, the plans include ending production at Volkswagen plants in Hanover, Emden and Zwickau, alongside Audi’s Neckarsulm factory once current vehicle programmes come to an end.

Volkswagen declined to comment on what it described as confidential internal documents, but acknowledged the scale of the pressures facing the business.

“It is correct that the entire automotive industry and the Volkswagen Group are undergoing a profound transformation,” a spokesperson said.

“The executive board has repeatedly stated that our current business model no longer works across all brands: developing cars in Germany, producing them in Europe and exporting them to the world.”

“The world has fundamentally changed in recent years.”

The company added that tariffs, intensifying competition and stagnating markets were creating financial pressures amounting to “tens of billions of euros” a year, forcing a sharper focus on costs and investment.

China pressure forces painful reset

The reported overhaul comes just days after Volkswagen agreed to sell a majority stake in heavy-engine business Everllence to Bain Capital for €7.4bn (£6.38bn(, the latest step in Blume’s efforts to simplify a corporate structure investors have long argued is too sprawling and expensive.

The cuts also underline the mounting pressure facing Europe’s traditional carmakers as Chinese rivals continue to gain market share both at home and overseas.

Chinese manufacturers including BYD, Geely, SAIC and Chery have rapidly expanded across Europe with competitively priced electric vehicles, eroding the dominance long enjoyed by German brands.

Volkswagen itself lost its position as China’s biggest carmaker to BYD in 2024 before briefly reclaiming the top spot earlier this year as government subsidies for electric vehicles faded.

But the longer-term trend remains challenging as domestic Chinese manufacturers continue to dominate EV sales while expanding aggressively into Europe.

Recent data from the European Automobile Manufacturers’ Association showed Chinese brands doubled their European market share in May compared with a year earlier, highlighting the competitive pressure reshaping the continent’s automotive industry.

The restructuring also follows Volkswagen’s search for new growth beyond traditional car manufacturing.

Earlier this year the company explored using spare production capacity at its Osnabrück plant for defence manufacturing, holding talks with Israel’s Rafael Advanced Defense Systems over producing defence-related components as it looked for ways to utilise underused factories.

Matthias Schmidt, founder of Schmidt Automotive Research, said: “The VW Group has suffered from years of neglect in readjusting workforce numbers due to the stranglehold the regional government and trade unions have on the company.”

“The market reality is hitting the German giant hardest.”

The plans are expected to form part of Blume’s so-called ‘Concept 2030’ strategy, due to be presented to Volkswagen’s supervisory board next month.

Any attempt to close factories is likely to face fierce resistance from Germany’s powerful IG Metall union and Volkswagen’s works council.

Lower Saxony, the company’s second-largest shareholder, has also said it would oppose any restructuring centred on plant closures.

Volkswagen shares have lost more than 30 per cent this year and are trading close to 16-year lows, as investor concern rises over whether Europe’s biggest carmaker can regain ground in an industry increasingly defined by Chinese competition.