Volkswagen Plans 20% Cost Cuts Across All Brands by 2028, Reuters Reports

Volkswagen is targeting a 20% reduction in costs across all of its brands by the end of 2028, business publication Manager Magazin reported on Monday, as the German automotive giant moves to safeguard its finances in the face of rising expenses, a difficult trading environment in China and the continued pressure of United States tariffs.

According to Reuters, citing the report, Volkswagen chief executive Oliver Blume and finance chief Arno Antlitz presented what was described as a "massive" savings plan during a closed-door meeting with senior company executives held in Berlin in mid-January.

A company spokesperson confirmed to Reuters that Volkswagen launched a savings programme spanning all brands and entities three years ago and has since achieved reductions in the double-digit billion-euro range. The spokesperson said the programme has allowed the group to absorb geopolitical headwinds, including US tariffs.

Manager Magazin reported that specific details of where cuts will be made and how cooperation between brands will be improved had not been clarified at the January meeting, though plant closures had not been ruled out as a possibility.

Works Council Rules Out Plant Closures

Volkswagen's works council chief, Daniela Cavallo, acknowledged the Manager Magazin report but pointed to an agreement struck with Volkswagen AG at the end of 2024, under which measures for competitiveness were tied to commitments protecting the workforce. "With this agreement, we have expressly ruled out plant closures and layoffs for operational reasons," Cavallo said in a statement, as reported by Reuters.

35,000 Jobs to Go by 2030

Europe's largest carmaker is already in the process of cutting 35,000 jobs in Germany by 2030. Its core Volkswagen brand announced in January that it planned to reduce management positions and consolidate its production platform, with a target of saving 1 billion euros (approximately $1.2 billion) over the same period. The Volkswagen spokesperson told Reuters that Blume is expected to provide a further update when the company presents its annual results at a press conference on 10 March.

Sector-Wide Pressure

Volkswagen's cost drive comes amid mounting challenges for German carmakers in China, where they face an intensifying price war with domestic rivals. The group also continues to invest heavily in software development and the parallel development of combustion engine and electric vehicle platforms — costs that remain elevated, Manager Magazin reported, citing a source present at the January meeting. Volkswagen said on Friday it remained committed to its long-term trajectory towards more efficient, lower-emission vehicles.

Volkswagen's difficulties are not isolated. Mercedes-Benz last week warned that the profit margin at its automobiles division could decline further this year and pledged to apply what it termed "relentless cost discipline," Reuters reported.