Volkswagen CEO Oliver Blume has warned that the automotive industry is facing mounting pressure, requiring deeper cost reductions as the company prepares for extensive restructuring negotiations. In an internal memo, Blume indicated that industry conditions are expected to worsen, emphasizing the need for Volkswagen to improve its competitiveness. The company is currently undertaking its largest-ever restructuring program.
Blume highlighted that Volkswagen's overhead costs are more than 30% higher than those of comparable companies, making the current situation "more than critical." While current margins below 4% are considered strong given the market, they are insufficient to fund long-term investments in new technologies, products, and facilities. The company aims to close the cost gap with competitors, and discussions on the turnaround program are set for a supervisory board meeting on September 4.
The potential restructuring could involve as many as 50,000 additional global job cuts, though this figure is not a formal target but an indication of the necessary cost savings. These potential reductions come on top of a similar number of job cuts from a 2024 cost-savings effort, potentially bringing the total to 100,000. Volkswagen is facing increased competition from Chinese manufacturers in Europe, declining profitability in China, U.S. import tariffs, and excess production capacity across its European operations.
Blume also mentioned that four German plants—Emden, Hannover, Zwickau, and Neckarsulm—are unlikely to achieve competitive capacity utilization in the 2030s, though no plant closures have been decided. In July, Volkswagen announced plans to reduce its model lineup and further lower production capacity. Porsche SE, Volkswagen's majority shareholder, has urged swift action due to billions of euros in impairment losses related to its investment. Volkswagen reported an operating profit of €5.93 billion ($6.76 billion) for the first half of 2026, an 11.6% decrease, with revenue falling 0.2% to €158.10 billion.
The CEO will visit plants that could be affected by the restructuring plan. He stressed the importance of company-wide support for the plan, while the head of the IG Metall union has criticized management and vowed to resist factory closures, noting that workers have already accepted significant cuts.
