Volkswagen’s sales in China have dropped by a third, and global demand is weakening, prompting management to plan a “clean-up” of its model lineup. The CEO of the conglomerate asserts that closing factories is a last resort.
Volkswagen CEO Oliver Blume told Bild that he is reluctant to shut down plants in Germany to cut costs. He emphasized that he sees “more sensible solutions” available.
“Last year, we managed to reduce production costs at our German plants by an average of 20%. That’s a significant improvement… We are the clear market leader in Europe, both for internal combustion engine vehicles and fully electric cars,” he stated.
Blume also noted that Volkswagen products are in high demand, but the company is struggling to “generate sufficient profit.”
“That’s why we need to keep cutting costs. In every area,” he added.
Meanwhile, Bild reports that despite the success of the new electric vehicle lineup (with over 50,000 units sold, including the ID. Polo), Volkswagen’s financial performance is deteriorating—global sales fell by 8.6% in the second quarter, while the decline in China reached 36.6%.
This week, the company’s supervisory board rejected the cost-cutting program proposed by Blume. In response, the CEO did not comply with the unions’ ultimatum to publish restructuring plans by the end of the week.
To save €6.5 billion by 2031, the company plans to discontinue production of several models from Core, Audi, and Porsche. The decisive vote on the savings program is scheduled for December. If it does not succeed, the issue will be addressed at an extraordinary general meeting of shareholders.
In mid-June, Manager Magazin reported that six out of nine Volkswagen executives, in an anonymous survey, described the company’s condition as “a threat to its existence,” while the remaining three called it “tense.”
The Financial Times noted that German automotive giants have begun an unprecedented wave of layoffs amid the “takeover” of the European market by Chinese brands. According to sources, Volkswagen could cut up to 100,000 jobs—one-sixth of its workforce—by 2030.
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