FRANKFURT, Germany (AP) — Volkswagen shares rose 6% on Friday after its board of directors approved sweeping cost cuts aimed at confronting challenges including ferocious Chinese competition and US tariffs.
Investors were cheered by CEO Oliver Blume's success Thursday in pushing the streamlining effort through the board, where employees are strongly represented.
The plan envisions reducing Volkswagen's work force by 50,000, phasing out four factories in Germany to eliminate expensive excess production capacity, and slimming the company's roughly 150 different models to half that.
Perhaps the biggest challenge the company is facing is China, formerly a major source of profits. The overall Chinese market has slumped by more than 20% this year as local competitors launch hundreds of new models amid fierce price competition.
VW has also been hit by higher U.S. tariffs on cars imported from Europe. Volkswagen’s profits fell by 31% in the first half of the year to 3.1 billion euros ($3.6 billion), even though outside of China it sold more cars worldwide than the same period last year.
Volkswagen's worker-friendly structure, with employee representatives holding half the board seats and the local government of Lower Saxony two, had raised doubts about whether Blume could push through his plan, which was rejected at a board meeting in July.
The board decision was a “much better than feared outcome,” wrote Deutsche Bank analysts. While it doesn't solve VW's challenges overnight, “it removes one of the biggest investor concerns: whether the company is still capable of making the difficult decisions required to address them.”
They said it could have a “halo effect” on other German manufacturers and encourage them to make similar difficult adjustments.
Volkswagen said that “currently” it plans to phase out production over 2031-34 at four plants, in Emden, Zwickau, Hannover und Neckarsulm, although it held out the possibility of finding other uses for the plants. Slimming the number of models would mean higher volumes per model, lowering fixed costs.
The job cuts would include management personnel as well as assembly line workers and would be accompanied by streamlining of management structures to speed decision-making.
Volkswagen, which has some 650,000 employees, is already in the process of reducing headcount under an earlier restructuring. In an online Q&A on the company's website from Aug. 21, Blume said that the company had already signed 37,000 contracts to reduce headcount under that set of cost cuts, mainly through early retirement.
In addition to the core Volkswagen brand, its other nameplates include Audi, Skoda, Porsche and SEAT.
A view of a pedestrian traffic sign near to the Volkswagen brand skyscraper, in Wolfsburg, Germany, Friday, Sept. 4, 2026. (Moritz Frankenberg/dpa via AP)
A view of the Volkswagen plant in Zwickau, Germany, Wednesday, Aug. 26, 2026. (Hendrik Schmidt/dpa via AP)
The VW logo in front of the Volkswagen plant in Osnabrueck, Germany, Wednesday, Aug. 26, 2026. (David Ebener/dpa via AP)
KUALA LUMPUR, Malaysia (AP) — Malaysia declared an emergency Friday in a town in Sarawak state on Borneo Island after air pollution breached the country's emergency-level threshold linked to fires in neighboring Indonesia.
The Air Pollutant Index in Serian, a small agricultural town of just under 90,000 near the border of Indonesia's Kalimantan province, surged to 521 on Friday, according to Malaysia's environment department. Sarawak's much-larger capital, Kuching, also showed a hazardous reading of 311.
Malaysia's King Sultan Ibrahim Iskandar has consented to the declaration of an emergency in Serian, which would allow more effective measures to be taken, Prime Minister Anwar Ibrahim’s office said in a statement. It didn't provide details but officials have said a reading above 500 could provide for nonessential work and outdoor activities to be halted. Schools are already shut if the index is above 200.
Haze is a recurring seasonal problem in Southeast Asia, where smoke from forest and peat fires in Indonesia can travel across national borders and affect neighboring Malaysia, Brunei and Singapore.
Sarawak has been the worst-hit Malaysian state by the haze, with several areas having hazardous air levels in the past few days.
The haze this year has been particularly severe, with elevated fire activity in several provinces in Indonesia, including Kalimantan, and prolonged dry conditions contributing to worsening pollution across parts of Borneo.
Satellite data from Indonesia's Forestry Ministry on Friday detected 717 hot spots nationwide likely caused by forest fires since Aug. 1. The data showed 103 active hot spots in the past 24 hours alone.
Indonesian authorities have deployed firefighting resources and attempted to induce rain.
Indonesian police announced Friday that they have arrested 112 people suspected of starting the recent forest and peatland fires in 10 provinces on Sumatra and Borneo islands. The suspects were local farmers accused of deliberately burning land to clear areas at lower cost.
Indonesia has also suspended the business licenses of five companies over alleged forest and land fires within their concessions in the Kalimantan province.
Pipit Subiyanto, a senior police official at Indonesia’s National Police criminal investigation agency, said authorities are investigating 167 cases involving the deliberate burning of some 4,700 hectares (11,700 acres) of land across nine provinces.
Kuching riverside in the city center is shrouded in thick haze in Kuching, Sarawak state, Malaysia, Friday, Sept. 4, 2026. (AP Photo/Xpin Voon)
Sarawak Astana government building is shrouded in thick haze in Kuching, Sarawak state, Malaysia, Friday, Sept. 4, 2026. (AP Photo/Xpin Voon)
The Sarawak Government Administrative Centre in Serian is shrouded in thick haze on Friday, Sept 4, 2026. (AP Photo)
Kuching riverside in the city center is shrouded in thick haze in Kuching, Sarawak state, Malaysia, Friday, Sept. 4, 2026. (AP Photo/Xpin Voon)
Kuching riverside in the city center is shrouded in thick haze in Kuching, Sarawak state, Malaysia, Friday, Sept. 4, 2026. (AP Photo/Xpin Voon)
