According to several internal sources, the German specialized magazine Manager Magazin concludes that the Volkswagen Group is working on a new cost-cutting program targeting additional savings of up to €60 billion.
Of course, economies at such a scale would involve reducing the workforce beyond the already announced 35,000 and, eventually, closing additional plants, following the closure of the Audi plant in Brussels last year.
Manager Magazin is citing anonymous internal sources. Until now, there’s been no official reaction from Volkswagen. The unions react with disbelief.
According to the magazine, Volkswagen CEO Oliver Blume and Group CFO Arno Antlitz presented the new savings plan to 120 executives during a retreat in mid-January. While participants had expected to be urged to exercise ‘frugality and cost discipline’, the scale of the savings plan presented by Blume and Antlitz took on a previously unimagined dimension, the report states.
“We must lower the break-even point,” Blume reportedly told the assembled group of executives and brand leaders. A 20% reduction in costs is the ‘ambition’, and this applies not only at the group level but across all brands and subsidiaries.
During the internal meeting, Blume and Antlitz did not specify where or how these savings, roughly €60 billion in VW’s expenditures, would be achieved. However, the message was clear: everyone present understood that savings would be required ‘everywhere’.
Difficult markets
The internal sources point to the difficult market as the main reason for this bold decision. Especially the Chinese and US markets are under pressure, partly due to import tariffs and fierce competition from China.
A Volkswagen Group spokesperson responded prudently to the allegations, noting that the company is already implementing a large-scale cost-cutting plan totaling several tens of billions of euros.
On the 10th of March, when VW holds its annual press conference, CEO Oliver Blume is expected to provide the latest details on the company’s cost-cutting program.
Under Blume’s leadership, the German carmaker has already pursued a cost-cutting agenda over the past two years, saving €15 billion in 2024 and € 18 billion expected in 2025. “Otherwise, the result last year would have fallen even further below the forecasted operating return on sales of 2 to 3 per cent,” Manager Magazin notes.
However, the brands have yet to reduce planned investments for the next five years to the previously stated level of €160 billion. Even this sum was reportedly described as too high by Blume during the internal retreat.
Dieselgate
Meanwhile, Volkswagen has responded strongly to new legal proceedings against the company initiated in France. These new proceedings are still in the wake of what is now commonly known as ‘dieselgate’.
Volkswagen claims that the procedure in the US and in Germany, where the company has been condemned to pay large fines, also includes explicitly Volkswagen vehicles sold in France. Nevertheless, the French justice has judicially summoned VW again before the correctional court in Paris for fraud.
“Because of the jurisdictional interdiction of being accused more than once for the same offence (‘ne bis in idem’), we find it unacceptable to be called before the court in France again,” VW officially stated.
To date, the Group has spent more than €32 billion on compensation and fines arising from dieselgate. The public prosecutor’s office in Paris reiterated at the beginning of last year its demand for jurisdiction on French soil, stating that it is perfectly possible to be judged in France after being condemned in Germany. The French jurisdictional initiative is being ‘complementary’ to the German one and not ‘cumulative’.
A jurisdictional follow-up is foreseen in December of this year, with an eventual trial in 2027. The Parisian Court’s call for justice also implicates other car manufacturers, such as PSA (now Stellantis), Renault, and Fiat Chrysler (now also part of Stellantis).
