Volkswagen Group is planning to cut costs by 20% across all brands by the end of 2028, Manager Magazin reported Monday citing internal sources.
Europe’s largest automaker faces mounting pressure from weak demand in China, tariffs in the US, and increasing competition.
The German group includes the main Volkswagen brand, Audi, Skoda, Cupra, Porsche, Scout Motors, among others.
The company’s CEO Oliver Blume and Chief Financial Officer Arno Antlitz presented the “massive” savings plan at a closed-door meeting with the firm’s 120 most senior executives in Berlin in mid-January, the German business outlet said.
The target amounts to approximately €60 billion — equivalent to $71 billion — in savings, according to the report.
“We need to lower the break-even point,” Blume was quoted as saying.
The 20% serves as “the ambition” and should apply to all brands and all cost categories.
All elements are under review, including material costs, development, sales, and administration, Manager Magazin mentioned.
Factory closures cannot be ruled out, nor can further job cuts beyond the 35,000 positions already announced.
A spokesperson of the German company said it launched a cost-cutting program across all brands and entities three years ago and has since achieved savings in the double-digit billion-euro range.
The program has enabled the group to offset geopolitical headwinds such as US tariffs, the spokesperson said.
Blume will provide an update at the company’s annual results press conference on March 10.
Job Cuts
Back in December 2024, Volkswagen reached an agreement with labor unions to cut over 35,000 jobs in Germany by 2030.
The company is currently working through the reduction process.
The firm had also requested its workforce to accept a 10% pay cut, as part of its restructuring plan.
According to the report, the main brand announced in January that it “planned to reduce management positions and consolidate its production platform,” intending to save €1 billion ($1.1 billion) by 2030.
Cavallo’s Reaction
Volkswagen‘s Work Council Chief Daniela Cavallo acknowledged the report but cited a December 2024 agreement with Volkswagen AG.
The deal outlined competitiveness measures alongside provisions to protect workers.
“With this agreement, we have expressly ruled out plant closures and layoffs for operational reasons,” Cavallo said in a statement.
According to Manager Magazin, a source at the meeting said the company’s spending on software and parallel combustion/electric development remains elevated.
Volkswagen mentioned on Friday that it “remained committed to its course towards more efficient and low-emission vehicles in the long term,” as stated in the report.
Factory Shutdowns
In September 2024, Cavallo announced that Volkswagen would close a minimum of its three manufacturing plants for the first time in its history.
In the last month of last year, the automaker halted production at its Dresden plant, in Germany — known as the “Transparent Factory.”
“The decision to end vehicle production at the Transparent Factory after over 20 years was not an easy one to make,” Volkswagen brand’s CEO Thomas Schaefer said at the time.
“It was, however, absolutely necessary from an economic perspective,” he added.
Starting in 2002, the Dresden facility manufactured under 200,000 vehicles up until its closure.
The carmaker clarified that the site would house a chip, AI, and robotics R&D center, with about half eventually occupied by the Technical University of Dresden.
The closure stemmed from mounting challenges, including Chinese competition, declining European market demand, and a lagging EV transition — pressures that have strained Volkswagen‘s financial position.
