VW's Preferred Shares Find a Bid as Hannover Rally Closes — But Friday's Board Meeting Carries a Double Payload

Volkswagen closes tense works meetings as Friday board weighs up to 50,000 job cuts, plant closures, and Iron Dome deal opposition.

Volkswagen wrapped up its nine-stop tour of extraordinary works meetings in Hanover on Monday, closing a tense chapter of labour consultations just days before a supervisory board session that could reshape the automaker's trajectory. The gathering marked the end of an August round that saw management and worker representatives dig deeper into entrenched positions, with the final assembly in Hanover serving as both a briefing and a barometer of employee sentiment.

The stakes could hardly be higher. Friday's board meeting is expected to address potential plant closures and job cuts that could reach 50,000 positions worldwide — a figure CEO Oliver Blume has characterised as a theoretical calculation rather than a decided target, a distinction that has done little to soothe tensions with unions that continue to reject both redundancies and factory shutdowns. Talks between leadership and labour representatives have recently touched on the possible closure of facilities and the reconfiguration of entire business divisions.

Blume had already set the tone more than a week ago in an internal memo, warning that industry challenges were intensifying and that Volkswagen required deeper cost reductions to remain competitive. At works meetings last Tuesday, management framed the impending cuts as part of the largest restructuring in the company's history, with roughly half of the additional job reductions expected to land in Germany.

A Second Battle Brews in Osnabrück

While the jobs question dominates the agenda, a separate controversy has been simmering in parallel. Bloomberg reported on Friday that negotiations are at an advanced stage regarding the production of support vehicles for Israel's "Iron Dome" missile defence system at the Osnabrück plant. The major shareholder Qatar, which controls 17 percent of voting rights, opposes the cooperation. A proposed solution involves transferring the plant to the state of Lower Saxony, which would then establish a joint venture with Rafael Advanced Defense Systems. This matter is also slated for the September 4 board agenda.

The convergence of these two heavyweight decisions — the fate of tens of thousands of jobs and the question of whether Volkswagen enters a politically sensitive defence business or outsources it to Lower Saxony — makes Friday's session a pivotal moment for the company's direction.

Investors Bet on a Turnaround Narrative

Despite the fraught atmosphere, the market has shown remarkable resilience. The preferred shares are currently trading at 77.96 euros, up 1.2 percent on the day, with a weekly gain of 6.0 percent. The stock had climbed 3.1 percent on Friday to close at 77.04 euros, extending its recovery from the 52-week low of 69.20 euros. Still, the gap to the December high of 109.10 euros remains considerable.

The market's interpretation appears to be that the announced cuts represent overdue surgery rather than a cause for alarm. That perception is reinforced by the prospect of clarity emerging from Friday's deliberations, which are widely seen as directional for the coming years. The works meetings were recognisably an attempt by management to prepare the workforce for the outcome of those discussions — and a test of mood ahead of the final session.

The Numbers Tell a Cautious Story

Not everyone shares the market's optimism. The DZ Bank lowered its fair value for Volkswagen from 95 to 75 euros last Thursday, maintaining a "Hold" rating in response to the difficult position the company finds itself in, caught between necessary cost discipline and looming social conflict.

The fundamental picture provides ample reason for caution. Volkswagen reported second-quarter 2026 revenue of 82.44 billion euros in July, up roughly two percent year-on-year, but earnings per share showed a significant decline compared to the same quarter a year earlier. Rolf Woller, head of Group Treasury and Investor Relations, outlined the "Target Picture 2030" mid-last-week, aiming for an operating return on sales of 8 to 10 percent. In the first half of 2026, that figure stood at just 3.8 percent — a substantial gap to the target corridor.

A Product Bright Spot

Away from the conflict lines, there is some product news to consider. Media reports suggest the electric small car planned for 2027, with an entry price of around 20,000 euros, will carry the name "ID Up," reviving the E-Up heritage. The name is not yet confirmed, but the model is viewed as a key building block for Volkswagen's return to competitiveness in the electric mass market.

For investors, the situation remains layered: the short-term share recovery reflects hope for clarity on Friday, while the structural challenges — profitability, workforce reduction, and the Rafael conflict — remain unresolved. The next quarterly report, due October 29 for the period ending September 30, should offer initial indications of whether the announced measures are already taking effect. The depth of the divide between management and labour will likely determine how workable any agreement on cost reduction, sites, and employment proves to be.