VW CEO seeks alternatives to German plant closures
Volkswagen's chief executive is pushing for continued cost reductions rather than factory shutdowns as the automaker struggles with weak profitability and fierce Chinese competition.
Volkswagen Chief Executive Oliver Blume is pushing back against speculation that the carmaker will shut down domestic factories, arguing instead for continued efficiency gains as the company battles weak margins.
The automaker's core problem is a failure to convert brand popularity into profit. “Volkswagen’s products are very popular, but we just earn too little money with them,” Blume told the Bild am Sonntag newspaper. “So we must continue to reduce our costs. In all kinds of costs.”
Blume’s comments come just days after the company announced its three-year “fundamental realignment” was entering a new phase. The most concrete move so far is a plan to slash the model lineup by up to half. However, management has not yet detailed how the remaining cost savings will be achieved.
To support his argument against plant closures, the CEO pointed to recent improvements in domestic manufacturing expenses. “We were able to improve our factory costs in Germany by an average 20% last year alone,” he said, calling it “strong progress.” “There are more intelligent solutions than closing plants,” Blume added.
Despite this recent progress, the financial pressure on the Wolfsburg-based manufacturer remains acute. The company is currently caught between high domestic production costs and increasingly intense competition in China, a historically lucrative market where foreign brands are losing ground.
For investors, the refusal to close plants raises questions about whether internal cost-cutting can keep pace with external market pressures. While reducing model complexity will streamline operations, preserving the entire German factory network limits the depth of potential structural fixes. Without the option of shedding facilities, management must extract savings entirely within existing sites.
Until the company provides a detailed roadmap for these remaining cuts, uncertainty over Volkswagen's margin recovery will likely persist.
