Volkswagen to ramp up restructuring after profit warning

By Christoph Steitz and Rachel More

FRANKFURT/BERLIN, Sept 21 (Reuters) - Volkswagen will ramp up its restructuring programme, the head of its core brand said on Monday as German auto workers staged nationwide protests less than three days after the company's profit warning highlighted sectoral challenges from high costs and fierce Asian competition.

The protests at Volkswagen, BMW and parts supplier Bosch are in response to painful job cuts, possible production relocations and even plant closures for Germany's most important industry in a crisis that was also reflected in the result of two state elections on Sunday.

"I had hoped that the measures agreed in 2024 would already be sufficient. Unfortunately, that has not been the case," Volkswagen brand head Thomas Schaefer told a staff meeting at the company's Wolfsburg headquarters.

'NO TIME TO LOSE'

"We have absolutely no time to lose and will therefore significantly step up our performance programme once again," he said, adding that the company and employee representatives will discuss how to proceed.

Europe's biggest carmaker plans to cut a further 50,000 jobs as part of a massive restructuring agreed with stakeholders this month, averting a full-blown dispute with powerful unions that still repeated calls on management to fix the issues.

Volkswagen works council chief Daniela Cavallo and IG Metall union head Christiane Benner called for stronger protection against unfair competition from China, a more effective European Union subsidy policy and continuation of a phased retirement programme.

"We expect corporate leaders and management teams to take responsibility for Germany as an automotive nation, for employees and for jobs," Benner told workers at Volkswagen's headquarters.

European automakers are facing increased competition from Asian rivals abroad and at home, creating a major problem for Volkswagen as it contends with overcapacity on the continent, US tariffs and plunging profits in China.

Volkswagen cut its 2026 profit margin outlook last week to 1% at the most, blaming the sluggish Chinese market and higher provisions for retirements while also lowering expectations for its Porsche sports car brand.

Part of the problem was accelerated demand for less profitable electric vehicles, highlighting the sector's dependence on combustion engines that have fuelled Germany's economy for decades.

"Most managers have failed to keep pace with developments in e-mobility, digitalisation and battery technology, thereby causing the German automotive and supplier industries to fall behind," said Horst Ott of trade union IG Metall.

Volkswagen shares, which were excluded from the benchmark Euro Stoxx 50 index on Monday, fell 1.1% by 1148 GMT, while Porsche dropped 1.6%, extending Friday's declines.

Shares in Porsche SE — Volkswagen's biggest shareholder, which also cut 2026 guidance on Friday — were down 3.1%.

($1 = 0.8715 euros)

(Reporting by Christoph Steitz and Rachel MoreAdditional reporting by Linda PasquiniEditing by Jan Harvey and David Goodman)