The Volkswagen Group (VW) is pushing deeper into cost-cutting territory, with fresh reports suggesting its savings drive is falling short of internal targets even as executives plan a new and far more ambitious round of cuts.
VW plans to cut costs by 20 per cent across all its brands by the end of 2028, a German business paper reported. The aggressive target comes as the automaker faces mounting pressure from weak demand in China, its largest market, and escalating trade tensions with the United States.
Reuters says the initiative aims to ensure that returns go back to sustainable levels, according to Manager Magazin. Chief Executive Officer Oliver Blume and finance chief Arno Antlitz presented a "massive" savings plan at a closed-door meeting with the company's top executives in Berlin in mid-January, the magazine says. Where exactly the savings are to be made remained unclear at the meeting, though plant closures could also be on the table. VW's expenditures on software and the dual development of combustion engines and electric drives remain high, Manager Magazin said, citing a source present at the meeting.
A VW spokesperson says the automaker has already achieved savings in the double-digit billion-euro range, adding that the programme has enabled the group to offset geopolitical headwinds such as US tariffs. The spokesperson confirmed that Oliver Blume will provide an interim update at the company's annual results press conference on 10 March.
These possible fresh cuts follow a deal struck in December 2024 between VW and labour representatives, which included more than 35,000 future job cuts and capacity reductions. The agreement was a far cry from the drastic savings originally proposed, which had included closing three German factories. VW's top labour representative, Daniela Cavallo, acknowledged the Manager Magazin report but stressed that measures had already been agreed upon.
"With this agreement, we have expressly ruled out plant closures and layoffs for operational reasons," Daniela says in a statement.
Adding to concern, Handelsblatt reported on 13 February that VW's cost-cutting programme did not meet expectations last year. The three largest plants in Germany, Wolfsburg, Emden and Zwickau, fell short of agreed targets in terms of capacity utilisation and efficiency. Costs also remain too high at VW's commercial vehicle plant in Hanover, Handelsblatt adds.
