VW aims to cut costs even further

Plant closures cannot be ruled out, nor can further job cuts beyond the previously announced 35,000 positions, reports the German Manager Magazin regarding the new cost-cutting programme. 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 exactly these savings—equivalent to roughly €60 billion Euros in VW’s expenditures—would be achieved. However, the message was clear: everyone present understood that savings would be required ‘everywhere’.

Participants suggest plant closures

This means it is not just about implementing a few measures in development or procurement, which could still have significant effects due to the economies of scale within the VW Group. Sales, administration, and production must also reduce their costs. Among the meeting’s participants, the term ‘restructuring programme’ quickly gained traction. Given the required savings and the partially poor capacity utilisation, one insider reportedly expected ‘even more radical steps than those recently taken at the VW brand’—where the aforementioned 35,000 jobs are being cut, though all locations are officially set to remain open—the impact on the Gläserne Manufaktur in Dresden is well known. “Plant closures must also be on the table,” the insider was quoted as saying. It is important to note that this reflects the statement of an anonymous participant at the internal VW meeting, not an official position expressed by VW CEO Blume during the event.

Under Blume’s leadership, the German carmaker has already pursued a cost-cutting agenda over the past two years, with €15 billion saved in 2024 and 18 billion euros 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 succeed in reducing the 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.

That the billions in savings are not just about preserving margins became clear at the end of 2025. At that time, rating agency S&P revised Volkswagen’s outlook to negative. A downgraded rating increases interest costs on debt, of which VW holds a total of €260 billion euros in long- and short-term liabilities. This was a consequence of a decision made by CFO Antlitz in September 2025, when he set the annual net cash flow forecast to zero.

While Antlitz and his taskforce have since secured €6 billion in cash at the brand level, it’s likely that this came at a high price. Externally, the move appeared to ensure that management had precisely the amount needed to secure executive bonuses through accounting measures. Internally, however, this step was critically received, as VW was said to have employed methods that ‘they had previously disdained’.

In response to the unexpectedly retained executive bonuses, works council chair Daniela Cavallo had already demanded a ‘recognition bonus’ for all employees. Regarding the reports of potential plant closures, she later wrote on the VW intranet: “There will be no plant closures with us.” She acknowledged the group’s situation but referred to the ‘Christmas truce’ from December 2024: “That is why we at Volkswagen AG already took action at the end of 2024 with the December compromise to improve competitiveness and ensure socially acceptable outcomes for the workforce. This agreement explicitly rules out plant closures and redundancies for operational reasons.”

The conflict could escalate again in the coming weeks, as works council elections are due at both VW and Audi in March. “Things will remain quiet until then, many in the company expect. But only until then,” Manager Magazin concludes pointedly.

manager-magazin.de (Savings programme), manager-magazin.de (Cavallo; both in German)