Volkswagen to cut 50,000 jobs amid challenges and moody’s downgrade
The VW logo on a building reading 'Commercial vehicles' (Nutzfahrzeuge) is pictured at the commercial vehicles plant of German car manufacturer Volkswagen (VW) in Hanover, northern Germany, on Dec. 20, 2024. (AFP Photo)
The German automotive giant Volkswagen (VW) has been facing intense competition from Chinese manufacturers, which has significantly impacted its position in the market.
Making matters worse, the company received a downgrade in its credit rating from the international credit rating agency Moody’s. This move came as VW revealed its plans to lay off 50,000 employees by 2030, a stark reality that underscores the company’s ongoing struggles.
As Europe’s largest car manufacturer, Volkswagen Group has been under increasing pressure from Chinese automakers, who are rapidly expanding and gaining ground in the global market. The recent mergers of European competitors have added to VW’s difficulties, especially in terms of sales.
In October 2024, Volkswagen announced its intention to close at least three of its factories in Germany, drawing considerable attention. Following negotiations with the IG Metall union in December 2024, VW revealed that it would be terminating contracts for 35,000 workers by 2030, a decision that sparked strong opposition.
Moody’s downgrades VW’s credit rating
Volkswagen’s financial situation has worsened, with significant declines in operating profit and cash flow. According to data released for 2025, the company has been suffering from tighter cash flow due to investments in the U.S. and China. Moody’s responded to these concerns by downgrading VW’s credit rating from “A3” to “BAA1” and shifting the outlook from negative to stable.
The agency noted that it does not expect significant recovery in operating profits or cash flow in the upcoming quarters. It highlighted the fierce competition within the automotive industry, particularly the challenges VW faces as it transitions to electric vehicles and contends with increasing pressure from the Chinese market.
Audi’s cost-cutting measures
Following Moody’s downgrade, Audi, one of Volkswagen’s main brands, announced plans to cut 7,500 jobs in Germany by 2029. This decision will affect administrative and development roles, with the company aiming to save €1 billion annually in the medium term. However, Audi has already cut approximately 9,500 production jobs since 2019, claiming that these reductions would help finance its transition to electric vehicles.
Meanwhile, other brands within the Volkswagen Group, including Porsche and the software division Cariad, have also announced job cuts. Porsche plans to lay off 3,900 employees, while Cariad will reduce its workforce by 1,600. When combined with VW’s plan to lay off 35,000 employees, these moves indicate that at least 50,000 jobs within the Volkswagen Group will be terminated over the next five years.
Looking ahead
The outlook for Volkswagen remains uncertain as the company navigates through a tough period of restructuring and competition. With ongoing investments in electric vehicles, efforts to reduce costs, and a focus on adapting to the rapidly changing automotive landscape, VW will need to overcome significant hurdles to ensure long-term stability.
While the company’s plans to cut jobs might help streamline operations, they also highlight the broader challenges the automotive industry faces in an increasingly competitive global market.
