The story of a major restructuring and cost cutting within the German automotive giant Volkswagen is active again. The corporation is preparing for a new, more radical wave of that process, despite previous efforts that have already brought savings measured in tens of billions of euros.
According to German business media reports, the CEO Oliver Blume and financial director Arno face presented a plan that foresees a reduction of expenses by as much as 20% in all brands of the group by the end of 2028. It is estimated that the ultimate goal is to accumulate savings of approximately 60 billion euros with the same goal as before – to ensure the long-term stability of the company.
Shutting down factories is on the table again
Although the concrete ways of achieving such high savings have not yet been fully clarified, the management does not rule out even the most unfavorable scenarios. After production in Dresden was suspended in December last year, which closed their first German facility in 88 years, there is speculation about the possible shutdown of additional factories. This development signals a significant shift in strategy at Wolfsburg, where operational efficiency is now being prioritized over the preservation of historic production capacity.
The main reason for the introduction of drastic measures is the strong drop in demand on the Chinese market, which has been a key pillar of the group’s profits for years. Data show that sales in China fell by 8% last year, but the long-term trend is even more alarming. As of 2019, when 4.23 million vehicles were delivered, the country’s annual demand has sunk to 2.69 million units. This decline of 36% in just six years puts enormous pressure on the finances of that corporation.
In addition to problems in Asia, Volkswagen also faces challenges in Western markets. Customs barriers in the USA and increasingly intense global competition are further eroding their profit margins. The combination of these factors led to Volkswagen recording a slight decline in global sales of 0.5 percent in 2025, while competitor Toyota retained the title of the world’s best-selling car manufacturer for the sixth year in a row with over 11 million vehicles delivered.
Official confirmation and a more detailed insight into the new comprehensive savings plan are expected on March 10, when Oliver Blume will hold the annual presentation of the Volkswagen Group’s results.