The setback raises fresh questions about how quickly Europe's biggest carmaker can cut costs and compete with Chinese rivals and rising U.S. tariffs.
Volkswagen's ambitious restructuring plan has run into major resistance after the company's powerful labour representatives blocked the proposal, according to sources familiar with the matter.
The vote took place during a supervisory board meeting on Thursday, where management's plan was rejected by 12 votes to seven. The decision deals a blow to CEO Oliver Blume, who is trying to streamline the automaker as it faces mounting pressure from global competitors and higher costs.
Labour Side Demands More Clarity
Sources previously told Reuters that the proposal could have included up to 100,000 job cuts and the possible closure of four German factories. Volkswagen's official statement, however, made no reference to layoffs or plant shutdowns.
Instead, the company repeated previously announced goals, including reducing annual production capacity from 10 million vehicles to 9 million and cutting its model lineup by as much as 50%.
The works council has asked management to provide more details on its cost-cutting plans by the end of Friday.
Analysts Say Plan Lacks Specifics
Analysts reacted cautiously to the outcome. Jefferies said there was "no indication of progress" toward an agreement, while Bernstein described the strategy as "long on ideals" and lacking concrete measures.
Market Reaction
Volkswagen shares rose 0.8% in early trading despite the boardroom setback. Broader European chip stocks also moved higher, helped by a 4.5% jump in shares of Micron Technology.
Why It Matters
Volkswagen's struggle highlights the challenges facing traditional European carmakers as Chinese competition intensifies and U.S. tariffs increase costs. Investors are watching closely to see whether the company can deliver meaningful reforms without support from labour representatives.
The next key event will be Volkswagen's response to demands for greater transparency on its restructuring plans. Any updates on potential job cuts, factory closures, or production reductions could significantly affect investor sentiment.
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Source: Reuters
Time: 12:30 PM EEST
