Volkswagen’s 100,000-Job-Cut Plan Faces a Hurdle: Lower Saxony’s Veto Power

The financial squeeze at Volkswagen has become impossible to ignore. First-quarter profit for 2026 slumped 30 percent to €1.56 billion, a fresh blow after a painful 2025. The root cause is no mystery: the group’s Chinese market share is being eaten away by domestic rivals BYD and SAIC, while soaring energy costs and new US tariffs pile on the pressure. A company spokesman conceded the current business model no longer works. The result is a restructuring plan of breathtaking scale: up to 100,000 jobs could go worldwide, with four German factories on the chopping block.

Hannover, Zwickau, Emden and Neckarsulm — together accounting for around 750,000 vehicles of annual capacity — are reportedly facing closure. Roughly 40,000 employees in Germany are bracing for the axe. The works council is furious. Deputy chairman Jürgen Mahnkopf called the proposals a breach of trust, noting that management had given job guarantees as recently as December 2024.

Yet the real battle may be political. The state of Lower Saxony holds a 20 percent stake in Volkswagen and makes no secret of its opposition to plant closures. Minister-President Olaf Lies has flatly rejected any shutdowns, and the state’s two seats on the supervisory board, combined with the half of the board occupied by labour representatives, create an effective blocking majority. IG Metall has denounced the cuts as an irresponsible threat, vowing to fight every step. Any hard-nosed efficiency push will need to navigate this political minefield.

Should investors sell immediately? Or is it worth buying Volkswagen?

Investors are already voting with their feet. Volkswagen’s preferred shares closed Friday at €74.40, barely a hair above their 52-week low. The stock has shed nearly 30 percent since the start of the year. Technical indicators paint a grim picture: the relative strength index has sunk to 23.3, deep in oversold territory, while the share price sits roughly 21 percent below its 200-day moving average. Some analysts spy long-term recovery potential if the restructuring actually sticks, but that remains a big if.

To shore up liquidity, the group is also considering the sale of non-core assets such as Ducati and Europcar. That would provide a cash buffer, but the central drama remains the fate of the German plants. The timetable is set: the supervisory board will debate the final version of the cost-cutting package on July 9. Volkswagen will then brief the market during a pre-close call for the first half on July 13, followed by the full half-year report on July 24. By then, management must show how it plans to reconcile the books with the political reality in Lower Saxony.