The automaker’s supervisory board rejected sweeping cost cuts, leaving CEO Oliver Blume’s turnaround strategy in limbo.

Volkswagen’s own workers’ representatives just torpedoed a major shake-up. On Thursday, the supervisory board voted 12 to seven against the restructuring plan, with labor representatives leading the pushback.

What happened

Blume wants to slim down Europe’s biggest automaker as it faces Chinese competition, steep U.S. tariffs, and shaky factory competitiveness at home. Earlier reports pointed to cuts of up to 100,000 jobs and four German plants potentially closing. But Thursday’s announcement skipped all of that, sticking instead to familiar goals: cutting production capacity from 10 million to 9 million cars a year and trimming the model lineup by as much as half.

Analysts weren’t impressed. Jefferies said there’s still no sign of real progress toward a deal, while Bernstein called the plan heavy on vision but thin on substance.

Market reaction

Volkswagen shares edged up 0.8% by 08:07 GMT. Elsewhere, chip stocks got a lift after Micron Technology jumped 4.5%.

Why it matters

Germany’s stakeholder system means unions and Lower Saxony’s government both sit on the supervisory board, giving labor real veto power over management decisions. That structure just proved it can stall even a CEO-backed overhaul, and it signals how hard meaningful change will be for VW going forward.

What’s next

The works council wants clear answers on further cuts by the end of Friday. Lower Saxony’s premier, Olaf Lies, acknowledged the industry is under serious pressure, and all sides say they’re working together to find a way through.

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Source: Reuters