Volkswagen Job Cuts Put Lower Saxony Leader Under Political Pressure

Volkswagen’s sweeping restructuring is creating a political challenge for Lower Saxony Premier Olaf Lies as he backs major job cuts while trying to contain growing support for Germany’s far-right Alternative fuer Deutschland (AfD).

Lower Saxony, home to Volkswagen’s headquarters and six factories, owns a 20% stake in the automaker. The state faces municipal elections on Sunday, with the AfD gaining ground against Lies’ Social Democratic Party (SPD).

Lies, who also serves on Volkswagen’s supervisory board, recently dropped his opposition to a restructuring plan that could ultimately result in well over 100,000 job losses across the group. He argued that failing to reach an agreement with management could have created even greater risks for Volkswagen as it struggles with Chinese competition, U.S. tariffs and high costs.

“We have to convey the certainty that we can solve these problems. Otherwise, extremist forces will get a boost,” Lies told Reuters.

The AfD has sought to capitalize on concerns surrounding Germany’s auto industry, blaming political intervention and policies including the European Union’s planned 2035 phase-out of new combustion-engine vehicles. AfD state faction leader Ansgar Schledde described Volkswagen’s planned job reductions and structural review as a “catastrophe for tens of thousands of families.”

Lies had initially resisted further cuts before accepting plans that could eliminate another 50,000 positions under Volkswagen’s current cost-saving targets. The agreement also provided additional time to seek alternatives for four factories that could face closure during the 2030s.

Political pressure could intensify as Volkswagen continues negotiations over its manufacturing footprint. The company’s Emden plant is located in Lies’ home region, while the EV-focused Zwickau factory in Saxony is also considered vulnerable.

Automotive analyst Stefan Bratzel expects at least two of the four threatened Volkswagen plants to eventually close, potentially extending contentious negotiations into next year’s election campaign.

“There are conflicting aims here — that’s perfectly clear,” Bratzel said of Lies’ roles as politician and Volkswagen shareholder. “The real conflicts are just beginning.”