- VW Group plans to cut costs by 20 percent by the end of 2028.
- Factory closures could be part of the plan.
- Savings will be applied across all brands.
Oh, it happened again. The Volkswagen Group may have implemented a cost-cutting strategy, but it doesn’t seem to be enough. Despite savings of an unspecified amount in the double-digit billion euro range, according to a company spokesman, even more cuts are now necessary. A new report from Germany claims the automotive conglomerate wants to cut costs by a fifth.
Business publication Magazine Manager (subscription required) alleged VW Group top executives attended a meeting in Berlin last month, where CEO Oliver Blume and CFO Arno Antlitz outlined a “massive” cost-cutting agenda. The plan reportedly calls for spending cuts of up to 20 percent across all brands by the end of 2028. Spiegel adding that the company aims to save around €60 billion.
It’s unclear how the VW Group intends to save such a large amount in a relatively short period of time. However, Magazine Manager suggested the worst possible scenario: factory closure. The report alleges that top officials in Wolfsburg have not ruled out the possibility of closing additional factories after ending car production at the Dresden site last December. The “Transparent Factory”, where the Phaeton once rolled off the assembly line, became the company’s first factory in Germany to close in 88 years after production of the ID.3 ended.
Photo by: Volkswagen
As for why the VW Group needs to cut costs even further, there are several factors at play. Sales in China continue to decline, dropping eight percent last year to 2.69 million vehicles. Although the year-on-year decline may not seem dramatic, if we take a broader look at previous results, we will see something different. In 2019, VW Group deliveries in China reached 4.23 million units, meaning annual demand has plunged by 1.5 million vehicles, or about 36 percent, in just six years.
And it’s not just China. Tariffs in the United States are also weighing on VW Group’s earnings, as competition in the global automotive sector intensifies. According to Magazine ManagerThese three factors are driving the push for greater cost cuts, although there has been no official confirmation of this.
We should learn more on March 10, when Oliver Blume is expected to provide additional details during the VW Group’s annual results presentation. In 2025, global sales will fall 0.5 percent to 8,983,900 units, making Toyota remain the world’s best-selling car manufacturer for the sixth consecutive year. The Japanese conglomerate delivered 11,322,575 vehicles in 2025, including vehicles from its Lexus, Daihatsu and Hino subsidiaries.
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Source: Volkswagen
Motorcycle Pickup1: The situation at the VW Group is not very good, especially considering that the company has decided to cut 35,000 jobs in Germany by the end of the decade. This reported 20 percent cost reduction is in addition to the €15 billion the company expects to save annually in the medium term through workforce reductions and the elimination of certain production shifts domestically.
Even so, the VW Group has reason for cautious optimism. They are preparing to launch a new wave of more affordable electric vehicles, starting with the €25,000 ID. The Polo arrives this year, complete with a crossover version. In 2027, the €20,000 entry-level EV will indirectly replace the e-up!, which was discontinued a few years ago. Similar brands such as Audi, Skoda and Cupra will also introduce more affordable electric models to expand their growing electric vehicle portfolios.
Source:
Magazine Manager, Spiegel
