The German automotive giant Volkswagen is preparing a broad cost-cutting plan. According to several press reports, the group aims to reduce its expenditures by 20% by the end of 2028, in order to restore profitability levels deemed sustainable in the face of an increasingly complex market environment.
According to the German magazine Manager Magazin, the group’s chief executive, Oliver Blume, and the chief financial officer, Arno Antlitz, presented a far-reaching savings plan during a closed-door meeting held in Berlin in mid-January.
A Restructuring Still Unclear in Its Outline
According to information reported by Bloomberg, the group’s executives have not yet specified which sectors would be directly affected by these measures. However, several media outlets are pointing to possibilities such as strengthening synergies among the group’s various brands, or even the closure of certain production sites.
This strategy comes amid a context marked by slowing demand in China, US tariffs, and an intensification of global competition, notably in the electric-vehicle segment.
A spokesperson for the group recalled that Volkswagen launched three years ago an operational program covering all of its brands and entities. This program is said to have generated savings of several billions of euros, contributing to cushioning geopolitical and trade pressures.
Social Tensions Over Bonuses
The new phase of cost-cutting comes as the works council is demanding the payment of a bonus to employees covered by collective agreements.
The chairwoman of the works council, Daniela Cavallo, justifies this request by an increase of around 6 billion euros (7.1 billion dollars) in cash flow forecasts. According to her, employees’ efforts in budget discipline deserve financial recognition.
The council mentions the possibility of a payment in May, a period in which Volkswagen has historically paid a flexible collective bonus. Yet, management had previously announced the elimination of this bonus as part of a cost-cutting agreement negotiated with the IG Metall union in December, after difficult talks.
The potential amount of the bonus remains to be determined, and a final agreement will have to be reached with the board of directors.
A Milestone Update Expected in March
Oliver Blume is expected to present an update on the progress of the cost-cutting plan at the group’s annual results conference scheduled for March 10.
Markets are watching this restructuring closely, as it aims to support the profitability of Europe’s largest automaker in the years to come. The equation remains delicate: reduce costs by 20% while maintaining investment in innovation, electrification, and global competitiveness.
