Volkswagen investors have lived through the cynical stage. Of course, there was no chance such an untamed monster could ever be brought back into the real world where shareholders were valued more than unions. Then there was the euphoria interlude, when apparently CEO Oliver Blume achieved the impossible with his huge cuts and closures. The shares burst into life with a 9% gain. Now investors are daring to dream. Maybe normality is possible.

“History makes us cautious about getting too excited about VW restructuring, but CEO Blume and team have secured major support to continue the most radical and convincing revamp of VW in years,” investment researcher Jefferies said in a research note entitled “Transformation Proceeding”, in which it retained its “buy” rating on the shares.

The VW board approved a plan including removing about 50,000 extra jobs, bringing the agreed total to about 100,000. It cut the model range in half. Four factories were excluded from future model production, although none were actually closed. The operating profit margin will be roughly doubled to 9% by 2030. But at least one contentious aspect of the plan remains unresolved – splitting the core VW brand and the components business into separate companies. There may be other unknown potential deal breakers.

Frank Schwope, automotive consultant and lecturer at FHM Berlin, wondered if there were any secret quid pro quos. Could the 4-day week be about to emerge, again?

“The agreement is a victory for Oliver Blume’s executive board, but it’s hard to imagine that no concessions were made to the workers. Concessions that we don’t yet know about. Otherwise, the workers’ representatives wouldn’t have done their job properly, especially as many workers are dissatisfied with the outcome,” Schwope said in an email exchange.

“It’s conceivable, for example, that instead of four plants being closed, only one at most will be shut down, and that the other three plants will be allocated new vehicle models again following restructuring. The job cuts could also be resolved relatively smoothly and in a socially responsible manner by introducing a four-day working week – a solution that already saved the VW Group back in the 1990s,” Schwope said.

On January 1, 1994, newly appointed chairman Ferdinand Piech introduced a 4-day week to solve a severe structural and sales crisis that threatened the immediate layoff of 30,000, about one-third of its German workforce. In the first nine months of 1993, VW lost about $1 billion as sales slid more than 25%.

VW is not close to that kind of crisis. It is still making money, although operating profit margins are under target. In the first half of 2026, VW’s profit margin was 3.8%, while the target was 4 to 5.5%. Standout Skoda’s profit margin was 8.5%.

Schmidt Automotive Research founder Matt Schmidt says if Czechia-based mass-market Skoda can make decent profits, VW ought to be able to get close, even though it has to contend with Germany’s higher costs.

“Just look at those margins over at Škoda. That is their target. I can’t see levels reaching those heights given the heavy German industrial footprint and footing some of those investments which Škoda leverages at a reduced cost, but getting close to that level is certainly doable following the headcount reduction and getting closer to reducing the 30% cost premium they currently have over peers,” Schmidt said in an interview.

“I worry that the headcount reduction will take longer than planned, though, with voluntary retirement packages becoming ever costlier as they try to reach their numbers and employees worry that life on the outside is simply too risky in today’s climate and try to prolong their employment contracts. Unions now realize that if they don’t show some form of compromise, the board may well try and challenge that traditional grip they and the state of Lower Saxony have. Then things really could get ugly,” Schmidt said.

Investment bank UBS wasn’t joining in the current euphoria and wondered if it was time to get more positive about Volkswagen. In a research note, UBS pointed to many obstacles in the way of VW’s plan for 8 to 10% operating margins by 2030.

Only minor improvement in margins

“Our base case remains only a minor improvement in margins over the coming years to around 5%,” UBS said in the report.

“The fact that VW, despite its specific governance, was able to pass this comprehensive package with steep cuts is positive for valuation, in our view. We think it underscores that management can “get things done” to address severe challenges,” UBS said.

UBS retained its “neutral” rating on VW

“We think VW is, together with Renault and Stellantis , one of the EU auto stocks that would react most to potential EU regulatory changes (PHEV tariffs, IAA, CO2) as political discussions will intensify in the coming months,” UBS said.

The EU tariffs on electric vehicles don’t include plug-in hybrids. This is expected to change soon. Chinese manufacturers have been making huge profits with their PHEVs, and EU curbs would pay off big-time for the European competition.

The Industrial Accelerator Act promises tougher local content rules designed to favor EU-made/low-carbon products and define when EVs qualify as “made in the EU”. The European industry has pushed for roughly 70% European content.

EU CO2 rules mandate 100% electric new car sales by 2035 but are expected to be diluted to 90%. The retention of ICE capability is seen as big boost to European automakers.

Next episode October 12 in Paris

Meanwhile, VW still has its singular corporate governance structure dating since the Second World War. The supervisory board has ultimate power with unions holding half of the 20 seats, and two of the rest held usually by Lower Saxony state politicians, where VW is domiciled.

Expect to hear more news about VW’s plans at a strategy update on October 12 at the Paris Auto Show. Meanwhile, VW shares still retain most of the sudden gains made after last week’s news. By early afternoon Thursday the shares were quoted at €82.35, still nicely above the lows before the news of about €74, but still about 25% down on the year.