"Volkswagen could cut 100,000 jobs"... Hyundai Motor and Kia face intensifying competition

As Europe's largest automaker, the Volkswagen Group is undertaking large-scale reductions in workforce and production capacity, which is expected to reshape the competitive landscape of the European automotive market. While Volkswagen shrinks its operations to cut costs, competition will intensify between Hyundai Motor and Kia expanding their presence in Europe and Chinese automakers pursuing external growth.

According to the automotive industry on the 4th, the Volkswagen Group's supervisory board approved a large-scale restructuring plan on the 3rd (local time) to strengthen the group's competitiveness. Volkswagen is currently planning to cut approximately 50,000 jobs by 2030, focusing on Volkswagen, Audi, Porsche, and its software subsidiary Cariad. The company now assesses that an additional reduction of about 50,000 employees will be necessary. If both plans are fully realized, the total job cuts across the group could reach up to 100,000.

Production capacity is also being adjusted alongside workforce reductions. Volkswagen currently believes its European production capacity exceeds demand by more than 500,000 units. Four plants in Emden, Zwickau, Hannover, and Neckarsulm in Germany have not yet secured follow-up production volumes for deployment after 2031–2034, prompting consideration of alternative utilization options. The company also plans to reduce its vehicle lineup by up to half and lower product complexity to enhance cost competitiveness.

Volkswagen's restructuring could provide an opportunity for Hyundai Motor and Kia to expand their foothold in the European market. The European automotive market is rapidly reorganizing around HYBE-led models and electric vehicles. In the first half of this year, HYBE-led vehicles accounted for 37.3% of all new cars in the European Union (EU), while electric vehicles made up 20.7%. As Hyundai Motor and Kia are expanding their electric vehicle and HYBE-led lineups in Europe, there is room to absorb some demand during Volkswagen's reduction of models and production capacity.

However, it is unlikely that the void left by Volkswagen will directly benefit Hyundai Motor and Kia. Chinese automakers are targeting Europe as a new growth base and are advancing rapidly into the market. BYD is significantly increasing overseas sales, including in Europe, amid intensifying competition within China. Geely has partnered with Ford to produce electric SUVs (sport utility vehicles) at its Valencia plant in Spain, establishing local production capabilities.

In particular, Chinese automakers are addressing tariffs and local sourcing regulations not only through price competitiveness but also by expanding production within Europe. If Chinese companies fill the gap left by reduced production capacity among existing European manufacturers due to Volkswagen's restructuring, Hyundai Motor and Kia could face an increase in new competitors.

Indeed, the rise of Chinese automakers lies at the heart of Volkswagen's current restructuring. Volkswagen has seen sales decline in China, its largest market, as it is being overtaken by local players such as BYD, while Chinese companies are also intensifying their offensive in Europe. Compounded by tariff burdens in the United States and overcapacity in Europe, the company has launched a major cost-cutting initiative.

An industry executive stated, "It is realistically difficult to assume that Hyundai Motor Group will immediately absorb the volume reduced by Volkswagen," adding, "The speed of Chinese companies' localization in Europe is accelerating, so price competitiveness and electrification capabilities will ultimately be decisive."