Volkswagen's decision to cut another 50,000 jobs and reshape its European production network is a warning of the scale of the adjustment facing Europe's car industry, including in Central Europe, where auto assembly and parts manufacturing has been a crucial part of the growth story over the last three and a half decades. 

The Volkswagen Group supervisory board approved its "Future Plan 2030" last week, setting out one of the most extensive restructurings in the company's history as it seeks to restore competitiveness in the face of weak demand, excess capacity and intensifying Chinese competition.

The group says it has more than 500,000 units of excess production capacity at its European factories. It cannot guarantee production allocations for its plants in Emden, Zwickau, Hannover and Neckarsulm beyond 2030 and is examining alternative uses for the sites. The additional 50,000 job cuts will come on top of a previously announced reduction of around 50,000 positions. Volkswagen also plans to halve its model range by 2035 and reduce complexity by around 75%, concentrating production on fewer, higher-volume models.

The aim is to sell 9mn vehicles a year and raise its operating margin to 9% by 2030, from 3.8% in the first half of 2026. Volkswagen plans to invest €135bn ($157bn) in capital expenditure and research and development between 2027 and 2031, focusing on technology, its brands and competitiveness.

Given how embedded Volkswagen and other major automakers are to the European automotive supply chains, the impact of the restructuring goes beyond Germany’s borders to the broader European automotive production system, with potentially important consequences for countries such as Czechia, Slovakia, Poland and Hungary.

For Central Europe, the immediate picture is mixed. Plants in the region have some of the cost advantages that Volkswagen needs, while their established supply chains and proximity to Germany make them natural candidates for production that is shifted away from higher-cost German facilities. At the same time, plants will increasingly have to compete for a smaller number of models, particularly electric vehicles, while suppliers face pressure to adapt to a rapidly changing technology mix.

Potential upside 

Slovakia is one of the clearest examples of the potential upside. The country is the world's largest car producer per capita and hosts a major Volkswagen plant in Devínska Nová Ves near Bratislava. Analysts surveyed by Slovak state broadcaster STVR have suggested that the German restructuring could ultimately bring more production to Slovakia.

"I see in this whole optimalisation of processes a chance that other models would come to Slovakia," Pavol Prepiak, vice president of the Slovak Union of Automobile Industry, told STVR. 

That possibility reflects the changing economics of Volkswagen's European production network. Some of the German facilities under review are heavily focused on electric vehicles, and production could potentially be reallocated to plants where costs are lower.

"Let's be aware that for instance in two of the plants which are being shuttered 100% electricity vehicles are made today," Prepiak said.

German media have previously reported that production of a luxury electric SUV could potentially be launched at the Devínský Nová Ves plant, though this has not been confirmed.

Poland is similarly positioned to gain from the reshuffling of Volkswagen production. Even before the group's restructuring was formally approved, Polish media pointed to the possibility that some production could move eastwards from Germany.

According to Polish news outlet Biznesalert.pl, production of Volkswagen's new family of electric vans, provisionally designated B-Space (T8) and planned for around 2028, is to be relocated to Poznań. That would give Volkswagen's Polish operation a new electric model at a time when the group is reducing production capacity in Germany.

Poland has spent decades building up an automotive manufacturing base that combines relatively competitive labour costs with a substantial network of suppliers and access to the German market. However, the immediate employment picture remains uncertain, and Polish media reported after Volkswagen's announcement that no decision had been taken on job cuts at Volkswagen Poznań or its Września plant.

Better insulated 

Czechia appears relatively well insulated from the immediate effects of the Volkswagen restructuring. Martin Vejdělek, spokesperson for Škoda Auto, told the Czech Press Agency that Volkswagen's plans would have no direct impact on Škoda's activities, reiterating the carmaker's statement from July. Czech suppliers are also not expecting a dramatic immediate impact.

"Thanks to the diversification of the portfolio of customers we are able to largely absorb the negative impacts caused by the instability of the automotive market," Jiří Heteš, staff manager at air-conditioning supplier DENSO Manufacturing Czech, told CTK.

DENSO supplies products to Volkswagen as well as Land Rover, Porsche, Mercedes, Audi, Škoda, Suzuki, Toyota, Ford and Lamborghini. Its broad customer base illustrates one of the most important factors determining how Central European suppliers will fare as the industry restructures.

Companies supplying several manufacturers, technologies and markets have greater scope to absorb changes in production at any one customer. Smaller companies heavily dependent on one vehicle programme or one propulsion technology are considerably more vulnerable.

Czech automotive manufacturing has also continued to grow despite the wider problems facing European producers. The country produced 780,378 passenger vehicles in the first half of 2026, 4.4% more than a year earlier, according to the Association of the Czech Automotive Industry. Electric vehicles accounted for 41% of domestic production.

Hungary shows the risks

Hungary illustrates why Central Europe's position is not automatically secure. Audi's plant in Gyor, western Hungary, could be exposed to Volkswagen's restructuring, according to German investigative outlet Correctiv, although no decision has been made to close the factory and Volkswagen has not confirmed the report.

Audi Hungaria employs more than 12,000 people and is the largest employer in the region. It produced a record 200,000 vehicles last year, driven by models including the Audi Q3 and Cupra Terramar, but its traditional engine business is under pressure from the transition to electric vehicles.

Audi Hungaria CEO Michael Breme told Telex in July that the workforce needed to adapt to the changing industry. "The new reality in the automotive industry is that job security is no longer a given; rather, it must be earned through concessions from employees," he said. Workers who spent much of their careers in engine production are increasingly being moved into electric motor manufacturing and vehicle assembly. The company has also reduced administrative staffing and imposed a hiring freeze, while unions have agreed to wage restraint.

Gradual decline

The changes at Volkswagen are ultimately a symptom of a much larger problem. Europe's automotive sector has been one of the foundations of the continent's industrial economy for decades. It supports millions of direct and indirect jobs and accounts for more than 7% of EU GDP, according to a paper by think-tank Shaping Europe titled “The slow decline of the European car industry”.  

“The European automotive sector has been struggling for some time now, for a variety of reasons such as the slow transition to electric vehicles, competition from China, and unrealistic climate targets,” the paper says. 

European consumers have been reluctant to embrace vehicles that remain expensive relative to conventional cars, while manufacturers have struggled to produce affordable models in sufficient volumes. At the same time, Chinese manufacturers have developed strong positions in electric vehicles and their supply chains, combining scale, relatively low costs and rapid product development.

A new model 

Central Europe’s automotive success was built on integration with Western European manufacturers. Czechia, Slovakia, Poland and Hungary became major production locations because they offered lower costs while remaining close to Germany and other large European markets. That model has worked extremely well. But it also created a dependence on decisions taken by multinational companies headquartered elsewhere.

The Vienna Institute for International Economic Studies (wiiw) has warned that the broader Central and Eastern European growth model is now reaching its limits as geopolitical fragmentation changes global trade and investment.

"The old growth model is over, and a new one is emerging," Richard Gieveson, wiiw's deputy director, said in February, as quoted in an IntelliNews article.

The region still has a significant advantage in manufacturing. Its integrated supply chains, competitive costs and proximity to Germany remain valuable assets. However, it needs greater investment in research and development, batteries, software, electric drivetrains and other technologies that will determine where future production is located.

Contributions from IntelliNews reporters in Budapest, Prague and Warsaw.