Volkswagen could face up to 4 billion euros ($4.4 billion) in provisions for planned capacity reductions, according to analysts at Jefferies. The financial estimate comes after discussions with company executives in North America. Earlier this month, Volkswagen announced it is considering plant closures in Germany for the first time in its history as part of a broader cost-cutting initiative, driven by challenges in competing with Asian automakers.
Jefferies analysts noted that while the need to resize Volkswagen’s core brand isn’t new, there is now a heightened sense of urgency and determination within the company to address excess capacity and spending habits. Following a trip with Volkswagen’s management, Jefferies emphasized that there is no alternative plan to avoid cutting capacity, estimating that provisions of 3 to 4 billion euros could be recorded in the fourth quarter.
Volkswagen has not commented on the reports. As part of its restructuring, the company recently ended a long-standing job security program at six of its German plants, sparking resistance from labor unions against potential job cuts.
Jefferies estimated that the charges could range from 2.5 to 3 billion euros, with the upper end reaching 4 billion euros when including potential severance costs and other unspecified closure-related expenses. Volkswagen, a German automaker founded in 1937, is one of the world’s leading automobile manufacturers known for producing a wide range of vehicles, from luxury cars to affordable, mass-market models.
The company is headquartered in Wolfsburg, Germany, and its name translates to “People’s Car,” reflecting its mission to produce reliable and accessible cars. Volkswagen’s product lineup includes popular models like the Golf, Passat, and the iconic Beetle, which has become a cultural symbol over the decades.
The company has also embraced innovation and sustainability, making significant strides in electric vehicle development with its ID series. Volkswagen’s global presence, engineering excellence, and commitment to sustainability continue to position it as a dominant force in the global automotive industry.
