Volkswagen India plans to cut 12 per cent of workforce as restructuring gathers pace

MUMBAI: Volkswagen is putting its India operations into a lower gear before stepping on the investment accelerator.

Volkswagen Group is accelerating a three-year restructuring programme in India that is expected to eliminate around 12 per cent of its workforce, according to a Bloomberg report.

The restructuring, which began in 2025, is now being implemented in faster tranches through 2027. A few hundred white-collar and shop-floor positions are expected to be eliminated as the German automaker works to reduce costs ahead of its next investment cycle in India.

The programme is expected to generate savings of tens of millions of dollars for the company’s Indian operations by the time it begins rolling out its next generation of vehicles, including a new electric model.

The cost reset comes as Volkswagen seeks to build a leaner operating base in India after struggling to achieve the scale of larger rivals in one of the world’s fastest-growing automotive markets. The company is also expected to expand its local engineering capabilities and strengthen India’s role as a manufacturing, engineering and export hub.

The restructuring is separate from Oliver Blume’s broader global turnaround programme. Volkswagen’s global plan includes 50,000 additional job cuts, a significant reduction in its vehicle model portfolio and a 16 per cent reduction in capital spending planned for 2027-2031.

The India restructuring also comes as Volkswagen considers a major change in the ownership of its local operations. The German automaker is reportedly nearing a deal that could give billionaire Sajjan Jindal’s JSW Group a controlling stake in the business, potentially bringing fresh capital into the operation.

The India programme is being driven by the requirements of the domestic business and its ability to secure funding from Volkswagen’s headquarters. It is expected to continue through 2027.

The restructuring reflects wider pressure across the global automotive industry, with manufacturers facing uneven demand, rising costs of electric vehicle development and growing competition from Chinese automakers.

In India, Volkswagen faces an additional challenge from its relatively small market presence after more than two decades in the country. The market continues to be dominated by Maruti Suzuki India and Hyundai Motor India, while home-grown manufacturers such as Tata Motors Passenger Vehicles and Mahindra & Mahindra have strengthened their positions across key segments, particularly SUVs and electric vehicles.

Volkswagen’s immediate focus, therefore, is on reducing its cost base while preparing the India business for its next phase of product, engineering and manufacturing investment.