Chief Executive Oliver Blume said the company is enforcing strict manufacturing cost targets across its global operations, including Germany, wider Europe and China, News.Az reports, citing Reuters.
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The strategy is aimed at reducing excess capacity and adapting production to a more fragmented global market, where exporting vehicles from Germany is becoming less competitive.
Job cuts to offset high domestic costs
A key element of the plan includes cutting around 50,000 jobs in Germany by 2030. Blume said the move is necessary to address structural disadvantages such as high labour and energy costs in the country.
He acknowledged that Volkswagen’s traditional model of producing cars in Germany for global export is no longer sustainable under current economic conditions.
Instead, the company is focusing on improving productivity and reducing inefficiencies in its domestic operations, which it says are weighed down by regulatory pressures and elevated energy prices.
Pressure from EV investment and Chinese rivals
Volkswagen has warned that its operating return could fall to around 4% this year, reflecting heavy investment in electric vehicle development and increasing competition from lower-cost Chinese manufacturers.
The company is tightening financial discipline by linking spending decisions to plant-specific cost targets, ensuring investments are aligned with regional demand.
The restructuring signals a broader shift away from a centralised export-driven model towards a more localised production strategy. Volkswagen’s ability to cut costs while maintaining market share, particularly in the fast-growing electric vehicle sector, is expected to be critical to the success of the overhaul.
