Volkswagen’s ambitious restructuring plans have suffered a setback after the company’s supervisory board rejected key elements of a proposed overhaul, although the German car giant is still pushing ahead with plans to simplify its model range and reduce production capacity.

According to Reuters, Volkswagen management failed to win approval for its most far-reaching proposals – including potential factory closures and additional job cuts – after labour representatives on the supervisory board voted against the plan by 12 votes to seven.

The proposals reportedly included cutting up to 100,000 jobs across the Volkswagen Group and closing four German factories as chief executive Oliver Blume attempts to improve competitiveness amid slowing demand, rising Chinese competition and the financial impact of US tariffs.

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While those measures have effectively been put on hold for now, Volkswagen has reaffirmed broader objectives that do not require supervisory board approval, including reducing production capacity, streamlining its sprawling model range and trimming investment spending.

Earlier reports suggested Volkswagen planned to halve the number of vehicle models offered across brands including Volkswagen, Audi, Skoda and Cupra, while significantly reducing the number of variants and option combinations to lower manufacturing complexity.

Like many established carmakers, Volkswagen is under increasing pressure from lower-cost Chinese rivals, weakening demand in Europe and the cost of US import tariffs. The company has also seen profit margins fall sharply since 2021, prompting management to target a reduction in annual production capacity from 10 million to nine million vehicles.

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Volkswagen has not confirmed reports of specific factory closures or the scale of potential workforce reductions, and analysts say the latest supervisory board meeting produced few concrete decisions beyond reiterating the company’s long-term goals.

“There was no indication of progress towards an agreement having been reached” on factory closures or large-scale job cuts, Jefferies analysts said following the meeting, while Bernstein analysts described Volkswagen’s announced strategy as “long on ideals, but very short on specifics.”

Volkswagen Group owns brands including Volkswagen, Audi, Skoda, Cupra, Bentley, Lamborghini and Porsche, and continues to face mounting pressure to reduce costs while investing heavily in electrification and software development.