Volkswagen is facing its most severe restructuring since the 2015 “Dieselgate” scandal as CEO Oliver Blume proposes a €60 billion cost-slashing programme and refuses to rule out closing German plants.
Blume presented a “massive” cost-cutting programme to the company’s top 120 executives in mid-January, targeting a 20 per cent reduction in costs across all brands by the end of 2028.
The plan, outlined during a closed-door meeting in Berlin, was described by Blume and Chief Financial Officer Arno Antlitz as a response to mounting pressures including sluggish sales in China, US tariff policies and an intensely competitive environment.
The group faces what insiders term “burning urgency” to restore sustainable profitability.
Blume reportedly told the assembled managers: “We need to lower the break-even point.”
He described the 20 per cent savings target as “the ambition”, applying across all brands and cost categories.
Plant closures have not been ruled out as part of the measures, according to reports citing company sources. This is a sensitive topic as Volkswagen only recently closed a factory for the first time in it’s 88-year history, in Dresden, due to weak demand.
The initiative builds on earlier efforts, including a cost-reduction programme for the core Volkswagen brand led by Blume and VW brand chief Thomas Schäfer, which aims for around €11 billion in earnings improvements by 2026 to achieve a 6.5 per cent operating return on sales.
Volkswagen has already secured €6 billion in additional liquidity, partly through the sale of receivables, amid financial strain that prompted ratings agency S&P to downgrade the group’s outlook to negative late last year.
Previous restructuring agreements with unions, including a 2024 deal to cut more than 35,000 jobs in Germany by 2030 without outright plant closures at the time, have addressed capacity and labour costs.
The latest proposals come as the European automotive sector grapples with the slow transition to electric vehicles, rising competition from Chinese manufacturers and trade barriers.
Blume has repeatedly stressed the need for stricter cost discipline and investment focus on future technologies.
Volkswagen has not issued an official comment on the Manager Magazin report that first detailed the Berlin meeting and savings target.
Further details are expected when Blume presents the group’s annual results on March 10.
All parties continue to operate under the presumption that structural adjustments remain essential for long-term competitiveness
