Volkswagen is laying off 50,000 staff across its VW, Audi, and Porsche brands over the next four years. The job cuts follow a rough year in which the company posted its lowest profits since 2016.
All of the layoffs announced so far are happening in Germany between now and 2030. The company has already agreed to 35,000 of the cuts with unions in a move expected to save around €15billion ($17.5 billion).
The Wolfsburg-based automaker’s profits dropped by 44% in 2025, leading to its worst year in almost a decade. The collapse in profits is partially due to competition from Chinese automakers like BYD. Volkswagen’s share of the Asian market has suffered massively, and the growing number of Chinese EV sales in Europe has hit the manufacturer hard on home soil.
Europe is also buying fewer vehicles in general, with figures suggesting 2 million fewer cars are sold per year than before the pandemic. As Volkswagen is Europe’s biggest vehicle manufacturer, it’s likely to have felt this hit harder than most.
Tariffs imposed by the Trump Administration have also affected Volkswagen over in the United States. While some VW vehicles, like the Atlas, are built in the United States and are tariff-free, others, like the Golf, are manufactured in Europe and are tariff-free under certain circumstances. Which means a hefty percentage (25% at the time of writing) is added once it crosses the border.
US-based manufacturing is also impacted. While vehicles are built in the United States, many of Volkswagen’s parts are manufactured in Europe or Asia. European parts come with a hefty tariff that has fluctuated on the administration’s whims. China’s tariffs tend to be over 100%.
Porsche has also seen profits crater with the performance brand’s EV pivot costing an alleged €4.7 billion ($5.5 billion) and pretty much taking out the marque’s entire operating profit in the process.
What does this mean for Volkswagen in the US?
All of the current layoffs at Volkswagen have centered around its German operations. However, VW does have a plant in Chattanooga, Tennessee — and layoffs there may not be off the table. The most ominous indication that more layoffs are on the way comes from the mouth of Volkswagen CFO Arno Antlitz.
According to the BBC, he warns that more cost cutting is coming, and the company’s current profit margin is not sustainable before adding: “We can only realize this if we continue to rigorously reduce costs. That is what we will focus on in the coming months.”
The one thing the Tennessee plant has going for it is the fact vehicles assembled there will not be subject to import tariffs in the United States. Though parts involved in the manufacturing are tariffed, unless they are made in Mexico or Canada. While VW does not have a huge share of the U.S. market, there are some advantages stateside when compared to Europe.
For a start, cheap Chinese vehicles are still de facto unimportable in most cases, so Volkswagen isn’t facing the exact same competition it has in Asia and Europe. While the U.S. attitude to Chinese imports could change in the future, for now VW may prefer a market where its historical competitors are all it has to worry about.
Which is good news for the company’s American workers.
