German automotive giant Volkswagen intends to implement a drastic savings program, aiming to reduce operating costs by 20 percent by the end of 2028. The plan, presented to management by CEO Oliver Blume and CFO Arno Antlitz, results from weakening sales in China, growing competition from Asian brands, and restrictive U.S. tariff policies. The restructuring may affect all brands within the group and threatens the closure of some production plants.

Goal: 20 Percent Savings

The conglomerate intends to reduce operating costs by one-fifth over the next four years, which is meant to improve the financial health of all group brands.

Factory Closures Possible

Under the leadership of Oliver Blume, the management is for the first time so openly considering the possibility of closing production plants as part of the search for efficiency.

External Market Pressures

The main drivers of the cuts are import tariffs in the USA, a collapse in sales in the Chinese market, and high energy costs in Europe.

The management of the Volkswagen Group has prepared one of the most ambitious restructuring plans in the company's history. During a confidential meeting in Berlin in mid-January, CEO Oliver Blume and CFO Arno Antlitz presented a strategy aimed at reducing costs by 20 percent by 2028. This translates to staggering savings of 60 billion euros. The conglomerate is responding in this way to a deteriorating market situation, which includes factors such as U.S. tariffs, slow demand for electric vehicles, and structural profitability issues with some of the group's brands. Volkswagen, founded in 1937 as a state-owned enterprise to realize the vision of mass motorization in Germany, has for decades based its growth on stable sales of combustion engines and dominance in Europe and Asia.The savings program is to cover all expenditure categories, from marketing to personnel costs. The company's leadership does not rule out the most painful steps, including factory closures, which has met with immediate opposition from works councils. Employee representatives warn against crossing "red lines" and are fighting to preserve jobs across Germany. The situation is complicated by the fact that the company incurs enormous expenses for the parallel development of combustion and electric technologies, while simultaneously facing software quality issues in new models. 60 mld euro — is the total scale of planned savings by 2028 Experts indicate that Volkswagen must improve its break-even point to maintain investment capacity in the era of rapid energy transition. Competition from Chinese manufacturers, such as BYD, is becoming increasingly aggressive in European markets, and the group's former bastion of profits—the Chinese market—is no longer a guarantee of growth. The break-even point must be drastically lowered for the conglomerate to remain competitive against startups creating exclusively electric vehicles. Główne przyczyny wprowadzenia programu oszczędnościowego: Competition from China: 90, U.S. Tariffs: 85, Weak EV Sales: 75, Software Development Costs: 60 „To survive in a highly competitive market, improving profitability is necessary, especially in light of weakened operations in China.” — Oliver Blume Liberal-leaning media emphasize the need for modernization and management errors in software and EV technology. | Conservative media highlight the threat to German industry and warn about the impact of EU climate policy on labor costs.

Mentioned People

  • Oliver Blume — CEO of the Volkswagen Group, responsible for implementing the new, drastic savings plan.
  • Arno Antlitz — CFO of the Volkswagen Group, who co-presented the plan for cost reductions of 60 billion euros.