Volkswagen Plans 20% Cost Cuts by 2028 | Auto News
Volkswagen is preparing to implement a sweeping cost-reduction program targeting a 20 percent decrease in expenses across the entire corporation by the end of 2028, according to a report published Monday by Manager Magazin.
The plan, unveiled during a mid-January meeting with the company’s 120 top executives in Berlin, was presented by CEO Oliver Blume and CFO Arno Antlitz. The initiative comes as Volkswagen faces mounting financial pressures stemming from a slowdown in the Chinese automotive market, the impact of U.S. Tariffs, and increased competition within the global automotive industry, Spiegel Online reported.
While details regarding specific areas for savings and potential brand synergies remain undisclosed, the possibility of plant closures was reportedly discussed during the closed-door meeting. Volkswagen declined to comment on the report when contacted by Reuters.
The urgency of cost-cutting measures was underscored by a recent negative outlook revision from rating agency S&P, which cited concerns that Volkswagen may fail to meet key financial metrics. This assessment, made shortly before Christmas, adds to the financial strain on the automaker, which recently identified a €6 billion liquidity buffer – a figure achieved partly through the sale of receivables, raising questions about future cash flow, according to n-tv.de.
Blume reportedly urged managers to “lower the profitability threshold,” framing the 20 percent reduction as an “ambition” applicable to all brands and cost categories, representing a potential savings of approximately €60 billion. The scale of the proposed cuts signals a significant shift in strategy for the automotive giant, which has been investing heavily in the transition to electric vehicles.
The move follows a pattern of cost-cutting measures across the German automotive sector, driven by similar headwinds in the global market. The long-term implications of the plan, including potential impacts on employment and innovation, remain unclear as Volkswagen leadership continues to evaluate options for achieving its ambitious savings target.