The Volkswagen supervisory board, meeting in Wolfsburg on Thursday, declined to vote on the most contentious elements of CEO Oliver Blume’s restructuring plan, deferring decisions on the proposed closure of four German assembly plants and the elimination of up to 100,000 jobs worldwide. Instead, the board endorsed a management proposal to slash the group’s model range by half—from roughly 150 nameplates to around 75—and to reduce the complexity of equipment variants by 75 percent. The move, which will inevitably reduce factory workloads, marks the start of what is expected to be a protracted negotiation with labour representatives who hold a temporary majority on the 20-seat body.

The pressure to act stems from a confluence of external shocks. Viewed from Beijing, Chinese competitors led by BYD have captured a 10 percent share of the European market, while Volkswagen’s own China deliveries fell to their lowest since 2011. In Washington, US tariffs imposed last year are projected to cost the group €5 billion annually, with Audi and Porsche lacking American factories. At home, high costs have left German plants operating at an estimated 73 percent of standard capacity by decade’s end.

The governance structure of Europe’s largest industrial employer makes radical action difficult. The state of Lower Saxony, which holds a 20 percent stake and a golden share, has declared that plant closures are “not a future strategy.” IG Metall organised protests at all German sites on Thursday, with works council chief Daniela Cavallo warning that industrial jobs “risk disappearing” without a political agreement. The worker side controls 10 of the 20 supervisory board seats, and with one shareholder seat vacant, it can block any decision.

The next round of talks, yet to be scheduled, will determine whether the board can reconcile the demands of labour and shareholders. The German auto industry, which directly and indirectly supports 14 million jobs across the EU and accounts for 7 percent of the bloc’s GDP, is watching closely. Meanwhile, Brussels is engaged in intensive trade negotiations with Beijing, seeking to address a bilateral deficit that runs at €1 billion per day. For Volkswagen, the immediate task is to translate the model-range cull into concrete capacity reductions—a process that will test the limits of Germany’s consensus-based corporate governance.