Volkswagen Is Still Reorganizing In Spite Of Lower Demand

Volkswagen CEO Oliver Blum said the ongoing restructuring process would continue, despite the German carmaker’s backlog of orders, and praised the planning of the China business.

He pointed out how, to avoid costly oversupply, Volkswagen applies “clear production cost targets” to all its factories, whether they are in Germany, Europe, or China, the Bild am Sonntag newspaper reported.

“We will examine capacity in the future, and restructuring will continue,” Blum said, defending the company’s plan to cut around 50,000 jobs in Germany by 2030.

Volkswagen, he said, has a higher cost structure in the domestic market, including labor costs. “And we have to make up for that with higher productivity,” Blum pointed out, Bloomberg reported.

He also warned that the energy costs in the company’s production are too high, as well as that there is too much regulation.

“Developing and manufacturing vehicles in Germany and then exporting them no longer works because different regions of the world have changed,” he said.

Volkswagen has forecast an operating profit of just four percent this year, as tariffs, spending on electric vehicles, and growing competition from China make its business more difficult. On the other hand, Blum pointed out that Germany can learn a lot from China.

“The Chinese have a very systematic approach with the so-called five-year plans and clear priorities in this regard,” he said. He sees the high level of discipline and readiness to implement these initiatives as very positive in China.

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