Volkswagen’s stock gets boost from plan to double job cuts to 100,000

Volkswagen shares surged by 6% on Friday following the board's approval of drastic cost-cutting measures, including a workforce reduction of 50,000 employees and the closure of four factories in Germany. The measures were aimed at tackling issues such as intense competition in China and US tariffs on imported vehicles. CEO Oliver Blume successfully pushed for the streamlining effort through the board, with employee representatives holding half of the board seats, which raised doubts about his ability to implement the plan.

The plan entails reducing the company's roughly 150 models to half, which could lower fixed costs and increase volume per model. Volkswagen currently operates 650,000 employees and is already in the process of reducing headcount under an earlier restructuring, with 37,000 contracts signed for the cost cuts thus far. While the plan does not solve all of Volkswagen's challenges immediately, analysts from Deutsche Bank view it as a "much better than feared outcome" and suggest that it could have a positive impact on other German manufacturers, encouraging them to make similar adjustments.