VW Group CEO Oliver Blume persists in its aim to cut costs dramatically inside the Group. Meanwhile, five of the most important brands inside the group’s portfolio face different levels of change and cost-cutting.
The German company’s overhead is higher than competitors’ by roughly one-fifth, Blume said in an interview published on VW’s intranet. Reaching parity implies a “theoretical deduction of about 50,000 positions, on top of a similar amount that’s part of a cost-savings effort launched in 2024,” he said.
No longer viable
“Group headcount has been growing for decades to a level that’s no longer viable today,” Blume said, according to the memo seen by Bloomberg News. “That’s because of changes in markets and negative effects outside of our control that weigh in the region of double-digit-billion-euro amounts.”
VW has come through some tumultuous weeks, with a worsening business outlook prompting renewed pressure to make cuts. Blume’s plan, including the reported doubling of the original 50,000 reductions and the possible closure of four plants in Germany, met labor opposition and failed to win initial board backing.
In the memo, Blume said there were “smarter options” than closing factories to address high expense levels and a drop in demand. He added that he was encouraged by an average 20 % improvement in factory costs in Germany over the past year.
“It’s also true that today, we can’t confirm a competitive allocation for the plants,” he said, referring to the company’s assignment of models for production across its sprawling web of sites.
VW, which employs over 657,000 people worldwide, is grappling with a number of challenges that have also beset competitors Stellantis, BMW and Mercedes-Benz. The most significant is the slump in sales in China, where buyers struggle with a protracted real estate crisis. U.S. tariffs are also hurting profit at the usually lucrative Audi and Porsche luxury brands.
The German business model is gone
Paired with a sluggish European market, VW’s high costs and underused factories have moved into focus. Blume said last month that the company’s business model of developing and exporting cars from Germany was no longer viable.
Last month, VW sold a 51% stake in its ship engine unit Everllence, generating proceeds of about €7.4 billion. VW has a portfolio of more than 2,000 stakes and businesses, which is also “an important area for change,” Blume said.
The company also owns the Ducati motorcycle brand and a stake in U.S. solid-state battery maker QuantumScape. It plans to examine which parts of its portfolio contribute to its core automotive business and returns.
Shrinking the global line-up
In the more distant future, Volkswagen wants to shrink its global lineup by 50% and cut its variant complexity by 75%. That means that all brands will be involved, some more, some less. Automobilwoche has made a brand analysis for five important ones. Let’s put them alphabetically.
Audi seems to want to cut the fastest and the deepest in its model range. The TT, R8, and Q8 e-tron are already gone, and the concepts we saw recently for successors of two of them will probably stay concepts. The brand recently retired A1 and Q2 as well, to be replaced in the future by one fully electric A2. The Q3 and Q5 Sportback are also seen as targets for saving money, and even the successor to the flagship A8 is under scrutiny at the moment.
Porsche will surely be trimming in sedans and EVs, but it will not cut into its icons. That means that 911, Cayenne, and Macan are probably secure. On the contrary, the future of Taycan and Panamera is definitely unclear, and the development of the 718 (be it fully electric or combined with ICE derivatives) has already been repeatedly paused and then again revived.
Seat’s survival as a brand is again in question. A few years ago, the plan was to make Seat a mobility provider and continue with Cupra as the car producer. Those plans were abandoned a while later, but are now re-emerging. Seat’s sales continue to fall, also because Cupra is gradually taking over, and now it’s time to make a decision. The brand has an aging, barely electrified lineup, and doubts about its survival are rising.
For the moment, Skada emerges as the safest brand, and Automobilwoche considers major cuts unlikely. Skoda’s recent successes with fully electric models, nevertheless, cast doubt about the successors for the combustion-engined Fabia, Scala, and Kamiq.
Last but not least, there’s Volkswagen. VW’s core lineup is already bleeding models. Touareg and Touran have already exited the configurator, with the T-Roc Cabrio following next year. The ID. 5 and the Taigo are seen as the next likely candidates to be axed, while the ID. 4 will become the electric Tiguan. and the ID. 7 will be called Passat again, be it fully electric.
For sure, that won’t be all, and many different options are still considered, from selling entire brands to leasing or selling entire manufacturing plants to competitors or partners, probably mostly Chinese. The future has indeed completely changed for a manufacturer that was the number one producer in the world not that long ago (10.97 million cars in 2019).
