Volkswagen Group CEO Oliver Blume has reaffirmed the company’s commitment to German production, while urging the country to learn from China’s “strong discipline and commitment to implementation.”
Speaking with Bild am Sonntag, Blume said production in Germany remains viable — provided costs drop, productivity rises, and the company adapts to intensifying global competition from China and US trade barriers.
While the company’s Chief Executive firmly backed German production — even as the company plans to cut 50,000 jobs in the country by 2030 — he also noted that “of course, we feel that the cost of our vehicles is too high.”
At the same time, he flagged the current global trade scenario — with high tariffs imposed in the US and China — high transformation costs, and increased competition combined with a smaller European market.
“That’s why we’ve carried out a comprehensive restructuring and realignment over the past three years,” he stated.
According to Blume, production relying solely on Germany is unpractical.
“Developing and producing vehicles in Germany and then exporting them no longer works the way it used to because global regions have changed,” he noted, adding that Volkswagen “created a transformation plan that tailors products much more locally to each region.”
Chinese Market
He exemplified this with China, where the company currently develops products specifically for the local market, also building them locally.
Volkswagen — once the top-selling automaker in China — lost first place to BYD in 2024 and fell to third behind Geely Auto in 2025.
Overall, the Group’s total sales in China fell 8% in 2025 across all vehicle powertrains, with battery-electric vehicles experiencing a decline of over 44% in the world’s largest EV market.
Volkswagen entered China in 1978 and formed its first joint venture, SAIC Volkswagen, in Shanghai in 1984.
A second partnership, FAW-Volkswagen, launched in Changchun in 1991 to produce cars under the Volkswagen and Audi brands.
The German automaker has been focusing on partnerships with local companies, including FAW Group and XPeng, to develop vehicles better suited to Chinese consumers.
Partnerships in China
In July 2023, Volkswagen announced a $700 million investment for a 4.99% stake in Chinese automaker XPeng, alongside plans to jointly develop two EV models for the market.
The partnership has steadily expanded since — covering a joint electronic architecture in April 2024 and extending to plug-in hybrid and combustion models by mid-2025.
In March 2025, Volkswagen and FAW deepened that relationship, agreeing to roll out 11 new models through FAW-VW from 2026, six of them fully electric.
The company launched the China Electric Architecture (CEA) platform, co-developed with XPeng, earlier this year — and plans to build all of its Chinese vehicles on the platform by 2030.
Together with its joint venture partners, Volkswagen delivered 2.93 million vehicles in mainland China and Hong Kong in 2024.
Around 50 million customers in China currently drive a VW Group vehicle.
Speaking with the German media outlet over the weekend, the automaker’s CEO said that “it’s worth looking beyond our own borders,” as there is “much Germany can learn from China’s development.”
Blume pointed to China’s auto industry as highly organized, with clear priorities and structured five-year plans.
“What we observe positively is strong discipline and commitment to implementation,” he added.
Job Cuts in Germany
Earlier this month, Volkswagen announced its plans to cut 50,000 jobs by 2030, following its fourth quarter earnings report.
The layoffs affect workers in Germany and across all its brands and represent a 43% rise compared to the 35,000 cuts the company had previously disclosed.
In a letter to shareholders, Blume said the layoffs were a result of collective bargaining agreements and downsizing measures, through which the company managed to to achieve cost savings of around €1 billion in fiscal year 2025 as planned.
“At the end of 2024, we agreed on a comprehensive future plan,” the CEO told Bild am Sonntag. “We’ve agreed to reduce 50,000 jobs in Germany by 2030 in a socially responsible way. We will continue reviewing capacity.”
Blume was questioned about a McKinsey study reported last week, which recommended that the automaker close eight of its 10 plants in Germany — keeping only the Wolfsburg and Ingolstadt facilities open.
However, the CEO said he was “not aware of any such McKinsey study.”
When pressed on whether he could rule out further plant closures in Germany, Blume stopped short of making guarantees.
He said the plants are “tied to clear cost targets” and that the company is “making good progress,” but that reviews would continue.
“Capacity will always be under scrutiny — not just in Germany and Europe, but also in China, where we’ve already adjusted our production network,” he said. “Overcapacity costs money.”
Commenting on a report that BYD is running its factories at 50% capacity earlier this year, Tesla‘s CEO Elon Musk said that “factories do great above 80% capacity, marginal at 60% and mega pain below 50%.”
Running a factory beyond its optimal capacity hurts profitability as fixed costs — like machinery, buildings, and salaried staff — are spread over fewer vehicles.
Blume acknowledged that the company’s higher cost structure needs to be offset by greater productivity.
He also pointed to broader challenges facing German industry, including high energy costs and heavy regulation, which he said “need to be reviewed.”
Outlook
Blume also used the occasion to paint a broader picture of the pressures facing the company.
He described a global landscape that has shifted dramatically in a short time.
“The world today is completely different from three years ago,” he said. “Europe is a smaller market with more competition. China has over 150 competitors and strong innovation dynamics. The US has aggressive trade policies.”
Beyond the geopolitical shifts, Blume acknowledged social strain as well.
“We’re also seeing social upheaval and looking back on a challenging year,” he said, noting that while “revenue and sales are roughly at the previous year’s level,” the company’s “operating result has declined significantly — mainly due to special factors,” including billions in US tariff costs and costly battery issues in the company’s electric vehicles.
Still, the CEO struck a more optimistic note.
“On the positive side, we’ve offset this with savings in the double-digit billions,” he said. “It’s encouraging that our products are being well received by customers.”
