Skoda Auto Volkswagen India is accelerating a three-year restructuring programme that is expected to reduce its workforce by about 12% as the Volkswagen Group seeks to lower operating costs ahead of its next investment and product cycle in India, according to people familiar with the matter.

The restructuring began in 2025 but is now being implemented in faster phases through 2027. Several hundred positions are expected to be eliminated across corporate white-collar roles and factory-floor manufacturing operations, the people said, requesting anonymity because they were discussing internal matters.

The programme is intended to reduce operating costs by tens of millions of dollars by the time Volkswagen begins introducing its next generation of vehicles in India, including a new electric model. The group is seeking to enter this investment cycle with a lower cost base after facing volume and scale constraints in the Indian automotive market.

"While we do not comment on speculative figures regarding our workforce, our ongoing efforts to optimize operations across our Indian business units continue to gain momentum," said Piyush Arora, Managing Director and Chief Executive Officer of Skoda Auto Volkswagen India.

Arora said the company expects to expand its local engineering team and increase investment in India as a manufacturing, engineering and export base for the Volkswagen Group.

India restructuring separate from global cost-cutting programme

The India restructuring is separate from Volkswagen Group Chief Executive Officer Oliver Blume's broader global cost-reduction programme, according to people familiar with the matter. The India initiative is linked to the domestic business's requirements to reduce its dependence on funding from the group's headquarters and is scheduled to continue through 2027.

Volkswagen's global restructuring includes plans to eliminate an additional 50,000 jobs, reduce its vehicle model lineup by half by 2035 and cut capital spending by 16% during the 2027-2031 period.

The India workforce reductions are also taking place as Volkswagen considers changes to its local ownership structure. The German automaker is close to a potential agreement that could give Sajjan Jindal's JSW Group a controlling stake and provide additional capital to the Indian business, according to people familiar with the matter. The companies have been discussing an equity partnership to provide additional domestic capital to the operation.

The India and global restructuring programmes have separate objectives, but both involve cost reductions as the global automotive industry faces weaker demand in some major markets, high investment requirements for electric vehicles and increasing competition from Chinese manufacturers.

In India, Volkswagen has a relatively small market presence after more than two decades in the country. The market is dominated by Maruti Suzuki India and Hyundai Motor India, while Tata Motors Passenger Vehicles and Mahindra & Mahindra are also among the major local manufacturers.

The restructuring is intended to reduce the company's operating cost base ahead of upcoming model launches and investment in next-generation vehicle technologies, including electric vehicles, while the group continues to develop India as a manufacturing, engineering and export base.