The European automotive industry is getting colder! Volkswagen is rumored to plan to cut up to 100,000 jobs globally in the coming years, with investment shrinking by 15%.

According to reports, Volkswagen (VWAGY.US) CEO Oliver Blume plans to reduce the global workforce by up to 100,000 employees in the coming years. In addition, Blume plans to reduce investments by about 15% over the next five years, bringing it to slightly above 130 billion euros (148 billion US dollars). The report states that Blume and Volkswagen Chief Financial Officer Arno Antlitz's goal is to completely restructure the company. Reportedly, Volkswagen's core brand VW and parts manufacturing plants will be separated from the current group structure and merged into independent entities. According to reports, Volkswagen plans to shut down its production facilities in Hanover, Zwickau, and Emden in Germany in the medium term, as well as its sister brand Audi's factory in Neckarsulm. Once the current production models in these factories have been iterated out, the relevant production lines will be completely shut down. Volkswagen has not commented on the matter. Despite recent upticks in European car sales, providing some breathing room for European car makers, they still face challenges such as rising costs, US tariffs, and increased competition. Data shows that Volkswagen's revenue for the fourth quarter of 2025 was 83.25 billion euros, a 4.7% year-on-year decrease; operating profit during the quarter fell to 3.46 billion euros, a steep 44.6% drop compared to the previous year. The outlook for this year is not optimistic, with Volkswagen expecting revenue growth in 2026 to be between 0% and 3%, with factors such as rising raw material costs, intense competition, and geopolitical tensions affecting profitability. Last week, BMW Group significantly lowered its performance guidance for the year, citing continued deterioration in business and the impact of the Iran conflict. BMW has revised the full-year EBIT profit margin for the automotive business from the previous range of 4% to 6% to 1% to 3%; the full-year total vehicle delivery expectation was revised from "flat with the previous year" to a slight decrease; and the group's pre-tax profit expected to decrease by over 15%, previously anticipated as a "moderate decline." Data shows that in the first quarter of 2026, BMW Group achieved revenue of 31.007 billion euros, an 8.1% year-on-year decrease; pre-tax profit of 2.348 billion euros, a significant 24.6% decrease compared to the previous year. Furthermore, the artificial intelligence boom is impacting the automotive industry. Jutta Denges, CFO of German automotive parts supplier Aumovio, recently stated that negotiations for securing storage chip supplies for next year have become increasingly difficult due to AI companies consuming a large amount of key storage chip supply. Denges said, "It is very difficult to procure adequate quantities. We have contacted suppliers, but no one is willing to reach an agreement on price." The company also faces supply chain tensions due to the Middle East conflict and high raw material prices.