Volkswagen Group towards drastic plan to cut costs by 20 per cent

Reducing costs has once again become the number one priority for major manufacturers, especially European ones, who are faced with sluggish sales, margin squeeze, Chinese competition, US tariffs and a transition to electric cars that is proceeding at different speeds in different countries. The Volkswagen Group has in fact launched a plan to cut costs by 20%. This was announced by CEO Oliver Blume and CFO Arno Antlitz in a report published in Manager Magazin magazine. In practice, the group intends to accelerate the recovery of competitiveness and start a new phase for all brands.

It is a massive programme that follows the one launched in December 2023 for the Volkswagen brand alone: christened 'Performance', it aimed to save EUR 10 billion by 2026 and reduce administrative costs by 20 per cent. Now the group aims to extend a similar plan to all its brands, from Ww to Audi to Cupra, from Seat to Skoda. The details will probably be announced on 10 March, at the budget conference and financial data presentation.

According to the magazine, Blume and Antlitz presented a 'massive' savings plan in mid-January during a closed-door meeting with key company executives in Berlin. During the meeting it would not be made clear where the savings would be made, nor how the cooperation between the brands would be improved, but according to the magazine, the closure of some plants could also be considered. Volkswagen is already implementing a cost-cutting programme announced at the beginning of 2025, which envisages the elimination of 35,000 jobs in Germany by 2030. It should be recalled that the Wolfsburg company, in a trade union agreement at the end of 2024, had agreed on measures for competitiveness and a socially acceptable impact on the workforce that expressly excluded plant closures; now, however, this could change.

Whatever the details, the stated goal is to bring returns to sustainable levels for the world's second-largest auto group, which, however, with less than 9 million cars, is well behind Toyota, which stands at 11.2 million. This is where both the fight against US tariffs and, above all, the China node, which represents a twofold problem, come into play. On the one hand, in fact, the group's brands in Europe suffer from competition from Chinese manufacturers; on the other hand, China itself has become an 'autarkic' country: Chinese motorists are increasingly buying cars produced by domestic brands.

With the haemorrhaging of sales in China, the group has archived that historical phase of dominance that began in the 1990s with the (Chinese) 'people's car', the Santana. Now the scenario has changed: the Chinese are snubbing German premium brands and the situation does not look set to improve. On the contrary, according to the latest report by AlixPartners, the share of local manufacturers will rise to 76% by 2030.