Volkswagen CEO calls for deeper cuts as restructuring nears – report

Volkswagen chief executive Oliver Blume has warned that the pressure on the automotive industry will demand more cost cuts as the company prepares for restructuring talks. In a memo obtained by Reuters, Blume noted worsening conditions in the sector, signaling the need for measures to boost Volkswagen's competitiveness. The German automaker is embarking on its largest restructuring effort yet, which may entail up to 50,000 job cuts and reorganizing certain units, though no official target has been set.

Volkswagen is contending with increased competition from Chinese manufacturers in Europe, declining profitability in China, US import tariffs, and excess production capacity across European operations. Blume stated that margins below 4% are adequate in the current market but are not enough to support investments in new technologies, products, and facilities in the long run.

Overhead costs at Volkswagen are over 30% higher than those of its peers, a situation Blume described as "more than critical." The supervisory board meeting to discuss the turnaround plan is set for September 4th, and Blume is expected to visit plants potentially impacted by the restructuring plan next week. The figure of around 50,000 potential job reductions globally is not a fixed target, but rather an indication of the cost savings required to catch up with competitors.

In July, Volkswagen announced plans to streamline its model line-up and lower production capacity. Blume highlighted that plants in Emden, Hannover, Zwickau, and Neckarsulm are unlikely to achieve competitive capacity utilization by the 2030s, but no plant closures have been decided. Porsche SE, being Volkswagen's majority shareholder, has urged swift action to enhance the group's competitiveness following billions in impairments from its investments.

Volkswagen reported a first-half 2026 operating profit of €5.93 billion, a 11.6% year-over-year decline, while revenue fell 0.2% to €158.10 billion.