VW ' s unprecedented restructuring
The automotive industry ' s biggest legacy OEM is changing. And the
South African division has a new boss.
Germany ' s largest company and, for many years, the world ' s biggest automaker, has confirmed an extraordinary restructuring programme. The scale of which will have real consequences for all its global business units and assembly sites, including its South African operations
Despite its impressive portfolio of brands and deep legacy in many global markets, VW’ s cost base has become untenable. That’ s why it will reduce its labour force of 680,000 by 100,000. This is the largest single automotive retrenchment in history and a moment of reckoning for the onceunrivalled German automotive industry. Legacy issues create crisis
VW ' s troubles have been well known for several months, with some experts pointing to labour and energy cost issues that go back years. Automotive analysts and economists have long called for VW to restructure, but the company ' s incredibly complex board structure and voting rights have prevented it.
German labour unions and local municipalities have voting rights on the Supervisory Board. The urgent restructuring that VW ' s senior managers have sought and the market expected has continuously been stalled or blocked by labour union votes.
But even the world ' s largest automaker can ' t defy cost realities. It ' s simply become too expensive to build a significant number of VWs in Germany each year. And with its primary export market and profit driver,
China, seeing demand for imported German brands collapse, VW is legitimately in crisis.
With some of the most generous salaries and benefits in the global automotive industry, factory workers have understandably resisted restructuring attempts over the last few years. But global events and economic realities have now overtaken even the vaunted VW in Germany and IG Metall, long believed to be the most powerful automotive trade union globally.
Labour unions change position
At the beginning of the year, Daniela Cavallo, the workers ' council representative on VW ' s Supervisory Board, spoke of the broken trust that any job losses or restructuring would cause. Only a few months later, the VW Supervisory Board, which includes Cavallo and local politicians in German cities where VW builds vehicles, have voted in favour of a dramatic restructuring. Something unimaginable at the start of the year.
The negotiated settlement between VW ' s management, IG Metall, and German municipalities will result in VW losing 100,000 jobs globally by 2030. It ' s a staggering number for a company that was absolutely dominant in so many markets and product segments, with pioneering engineering and technology, right up to the mid-2010s.
Beyond the job losses, VW will trim its global model count by half. Buyers will also have far fewer features and configurable options in the future. That could materially hurt the positioning of luxury brands like Audi and Porsche, where customers demand a high level
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