Volkswagen Layoffs Gain Speed: 20,000 Exit Early as 35,000 Job Cuts Proceed

In light of the continued Trump tariffs that are threatening the German auto sector, international automaker Volkswagen has announced plans to reduce its workforce by 35,000 employees by 2030 as part of its cost-cutting programme, according to a media report.

Citing a works council meeting at Volkswagen's Wolfsburg headquarters, a news portal reported that over 20,000 employees at the heart of the Volkswagen brand had decided to take voluntary retirement and terminate their contracts early.

It is anticipated that the majority of the job cutbacks would occur at the automaker's German operations, and the business hopes to implement the reductions in a way that is "acceptable" to those impacted.

Volkswagen's Offerings to Exiting Employees

Depending on their duration of service, the German manufacturer intends to provide severance payments to each employee impacted by the cost-cutting strategy.

According to a report, which cited the company's personnel meeting on June 5, the company is expected to pay up to $400,000, but it did not disclose the exact amount of severance payments.

In addition to laying off employees, the corporation plans to limit the number of apprenticeships it offers each year from 1,400 to 600 beginning in 2026.

According to the news article, the German manufacturer would probably save around 1.5 billion euros annually in labour costs as a result of these cost reductions and the widespread layoffs.

Nearly 130,000, or 13 lakh, workers in Volkswagen's core team are agreeing to a remuneration freeze in addition to their voluntary resignation. The corporation wants to increase salaries by 5%, which will be paid into a fund in two stages.

This money will be needed to finance flexible work schedules, among other things. The news broadcast also explained how these actions kept the German Volkswagen factory from closing.

Trump Tariff Woes Haunting the German Automaker

Following a report of a decline in the business climate index against the backdrop of the Trump tariffs from the United States, an international news agency previously reported that the German automotive sector further weakened in May 2025.

The European market's low demand and fierce competition from international brands are already problems for the manufacturers. As a result, Volkswagen, BMW, and Mercedes-Benz began negotiating a settlement with the US government to lessen the effects of tariffs.

According to a media report, the business climate index fell to -31.8 points from -30.7 points in April, while company expectations for May 2025 fell to -28.3 from -25.2 points in April.