In a stark assessment of Volkswagen’s (VW) ongoing struggles, international management consultancy McKinsey & Company has reportedly advised the German automotive giant to shut eight out of its 10 domestic factories in the long term.
Doing so would leave only the historic sites in Wolfsburg and Ingolstadt operational.
The proposal emerged in reports on March 14 from German tabloid Bild, which detailed McKinsey’s radical suggestions as part of a broader consulting effort to overhaul VW’s operations.
According to the outlet, potential closures would affect key sites including Zwickau, Emden, Neckarsulm, Leipzig and the Porsche plant in Stuttgart-Zuffenhausen.
Component factories in Kassel, Braunschweig, Salzgitter and Chemnitz could also face uncertain futures.
The aim, according to the reports, is to dramatically boost VW’s return on sales, which recently dipped below three per cent amid a halving of group profits in the previous fiscal year.
VW’s supervisory board and management have engaged multiple consultancies, with Boston Consulting Group (BCG) leading the overall restructuring plan, to address what insiders describe as a “burning urgency” for cost reductions.
McKinsey’s input, though, has stirred particular controversy due to its severity.
A follow-up Bild report highlighted the anger within VW’s works council, with a spokesperson for council chair Daniela Cavallo stating: “The board must deliver!” while criticising the executive team for failing to stem the company’s decline.
The council dismissed the reports about widespread closures as “baseless” speculations, insisting that no such plans are under serious consideration.
This revelation comes just months after VW’s first-ever factory closure in Germany – the Dresden site shut in December 2025 due to weak demand and US tariffs imposed under the administration of President Donald Trump.
That move marked a historic shift for the 88-year-old company, which had previously averted major domestic lay-offs through a December 2024 agreement with unions to cut more than 35,000 jobs by 2030 without outright plant shutdowns.
Yet the pressures have intensified. In February 2026, CEO Oliver Blume unveiled a €60 billion cost-slashing programme targeting a 20 per cent reduction across all brands by 2028, presented to top executives in a closed-door Berlin meeting.
Blume emphasised the need to “lower the break-even point”, refusing to rule out further plant closures amid challenges including stagnant Chinese market sales and escalating trade barriers.
The initiative follows earlier efforts, including an €11 billion savings drive for the core VW brand aiming for a 6.5 per cent operating return by year-end.
The broader European automotive sector is in turmoil, with McKinsey’s public reports highlighting the need for drastic measures to regain competitiveness against disruptions from electric vehicle transitions and global rivals.
German manufacturers, long the backbone of the European Union’s industrial economy, face deindustrialisation risks, as evidenced by recent lay-offs in suppliers and warnings from industry bodies including the VDMA mechanical engineering association.
VW’s influential family of Porsche-Piëch, holding significant sway over the company, is reportedly “appalled” by the situation, with internal criticism mounting against Blume and supervisory board chair Hans Dieter Pötsch.
A few days ago, news broke that the Porsche brand saw a drop in profits of more than 90 per cent, driven by the realignment of product strategy and recalibration measures, as well as battery-related activities.
Sources cited in German daily Merkur.de suggest potential leadership changes, including replacing Pötsch with Austrian manager Siegfried Wolf, as the family demands swift action to restore profitability.
A VW spokesperson declined to comment directly on the McKinsey recommendations but reiterated that the company is focused on “structural adjustments for long-term competitiveness”.
Europe’s biggest carmaker, Volkswagen Group, has presented dismal 2025 annual results.
Today, the company – which includes brands such as VW, Audi, Porsche, Seat and Skoda – announced it will cut 50,000 jobs in Germany until 2030 to regain efficiency. https://t.co/GaRExTKcqV
— Brussels Signal (@brusselssignal) March 10, 2026
