Volkswagen Group Prepares the Largest Cost Cuts in Its History
Volkswagen Group is gearing up for what could become one of the most significant internal restructurings the company has ever undertaken. Reports indicate that the automaker aims to slash operational costs by 20 percent across all its brands by the end of 2028. This ambitious target was outlined by CEO Oliver Blume and CFO Arno Antlitz during a private meeting with top executives in Berlin back in mid-January. The plan comes on top of earlier agreements from late 2024 that already set the stage for major changes.
The push for these savings stems from a combination of tough market conditions. Slow growth in electric vehicle demand, especially in Europe, has made the heavy investments in electrification less profitable than anticipated. Competition from Chinese manufacturers has intensified, leading to declining sales in that crucial market. On top of that, U.S. tariffs have added significant pressure, costing the company around 1.3 billion euros in lost profits during the first half of 2025 alone. Operating profits dropped by 33 percent in the same period, forcing leadership to act decisively.
This latest initiative builds on previous efforts to streamline operations. The group has already committed to eliminating more than 35,000 jobs in Germany by 2030 through natural attrition and other measures. Production of models like the Golf 8 is being shifted to Mexico to cut expenses. The Dresden Glass Factory is set to close, marking a symbolic end to certain traditional manufacturing sites. While specific new actions remain under wraps, insiders suggest that additional factory closures cannot be ruled out as part of achieving the broad 20 percent reduction.
The scale of the proposed changes has surprised even some within the company. Described internally as massive, the plan applies to every brand from Volkswagen and Škoda to Audi and Porsche. It covers all cost categories with the goal of lowering the break-even point and boosting overall margins. Estimates place the total savings around 60 billion euros, equivalent to roughly 71 billion dollars. Blume has emphasized the need for this transformation to navigate ongoing challenges and strengthen the group’s position against global rivals.
Despite the severity, the company continues to highlight socially responsible approaches where possible. Previous deals with labor representatives aimed to avoid compulsory redundancies in some areas. However, the combination of geopolitical tensions, slower EV adoption, and competitive pricing pressures leaves little room for delay. Volkswagen must adapt quickly to protect its long-term viability in an increasingly demanding industry.
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