Volkswagen Plans 20 Percent Cost Reduction and Considers Factory Closures

The Volkswagen Group is preparing for an unprecedented restructuring aimed at saving 60 billion euros by the end of 2028. According to „Manager Magazin”, CEO Oliver Blume and CFO Arno Antlitz presented details of the strategy during a closed-door meeting with management in Berlin. The board's ambition is to reduce operating costs across all divisions and subsidiary brands by 20 percent. The company's financial situation requires radical steps, and among the considered scenarios, the potential closure of selected factories in Germany is being openly mentioned for the first time in decades. The main reasons for such a drastic shift are macroeconomic challenges. Volkswagen is grappling with a significant drop in demand in the key Chinese market, where local electric vehicle manufacturers are effectively displacing European brands. Additionally, uncertainty stems from U.S. tariff policy and the high costs of simultaneously developing combustion and electric technologies. The board also points to the need to reduce software expenditure, which in recent years has become the group's Achilles' heel. Volkswagen, founded in 1937, was for decades a symbol of the German economic miracle, but the current crisis is the most serious test for the company since the „Dieselgate” scandal of 2015. The social side's reaction to these reports is firm. The works council has already announced setting „red lines” that cannot be crossed in the process of reducing employment or closing plants. Nevertheless, market analysts emphasize that without deep cost correction, the company's profitability will not reach a level allowing for funding future investments in autonomous mobility and next-generation batteries. The decisions made in the coming months could permanently change Europe's industrial landscape. „To secure this company's future, we must act now and drastically improve our cost base.” — Oliver Blume 20% — by how much VW wants to reduce costs by 2028 Main Challenges for the VW Group According to Reports: Weak sales in China: 9, Tariffs in the USA: 7, Software development costs: 5, EV competition: 8 [{"aspekt": "Cost reduction", "przed": "Standard level", "po": "Decrease by 20%"}, {"aspekt": "Factory status", "przed": "Guaranteed maintenance", "po": "Possible closures"}, {"aspekt": "Development expenditure", "przed": "Dual investments (ICE/EV)", "po": "Optimization and cuts"}]

Media emphasize employee concerns and the social risk associated with mass layoffs in the heart of German industry. | Business analysts focus on the necessity of restructuring to maintain global competitiveness against China.