Volkswagen Group has launched an all-encompassing new cost-cutting plan, which will determine the workings of the German automaker in the coming 3 years. The company said in a closed-door briefing attended by CEO Oliver Blume and CFO Arno Antlitz that it had a goal of cutting operating expenses by 20 percent in 2028. The announcement was hastened due to a series of reports in the German press that indicated that the group is preparing to face an even more hostile global environment due to the declining demand in China, the tariff-heavy U.S. market during the previous Trump administration, and an increasingly competitive environment.
Although the steps to be implemented are a secret, insiders in the industry indicate that the strategy might entail closing down some manufacturing facilities to simplify the organization. The strategy will be pegged to the fine in terms of maintaining the fundamental strengths of the diverse portfolio of the group, Blume, who will elaborate on how it will be executed at the March 10 conference, where the 2025 financial results will be announced, hinted. An official of the Volkswagen Group has remarked that this new program will be based on the huge savings that have already been realized by the group with the operational plan that was launched three years ago, which has resulted in tens of billions of euros of savings in all brands and subsidiaries.
Taking place in the context of declining margins and a fast-changing car industry, the choice of Volkswagen is an indication of why the group had to tighten its belt and remain one of the world leaders. The market watchers will be following keenly on the manner in which the cost-cutting push will be implemented within the next few years and whether the initiative will eventually remake the imprint of the group both in Europe and elsewhere.
