Volkswagen launches its biggest restructuring as Porsche faces more than 4,000 new job cuts

Volkswagen’s sweeping restructuring is expected to result in the elimination of more than 4,000 additional jobs at Porsche, German business newspaper Handelsblatt reported on Saturday. The report comes after Volkswagen lowered its profit expectations, a decision also linked to difficulties at its sports car division.

Documents accompanying a recent agreement by Volkswagen’s supervisory board to launch the German automotive group’s biggest restructuring to date envisage cutting around 4,100 jobs at Porsche. According to Handelsblatt, the move is intended to cover a shortfall of approximately €700 million.

These reductions will come on top of agreements already in place to reduce the workforce, the German newspaper reported.

In July, Porsche executives and employee representatives reached an agreement to eliminate another 5,000 jobs, in addition to 4,000 cuts decided earlier. Based on the measures approved so far, approximately one in five jobs at the German carmaker is expected to be affected by 2035.

Volkswagen declined to comment on the report. A Porsche spokesperson also declined to comment on the reported plans by the parent company’s supervisory board. Volkswagen may propose such measures to Porsche, but it does not have the authority to impose them.

Meanwhile, Volkswagen lowered its annual profit margin target on Friday. In the best-case scenario, the company now expects a margin of 1%, compared with its previous estimate of 4% to 5.5%.

The adjustment is mainly linked to the write-down of Porsche shares. The company’s chief executive, Michael Leiters, is also under pressure to present a recovery strategy following a decline in sales in China and the high costs associated with Porsche’s shift in strategy for electric vehicles.