In an interview published on Sunday, Volkswagen’s CEO Oliver Blume stated that the company’s planned cost-cutting measures were necessary to address longstanding structural issues faced by the German automaker. Blume highlighted that weak market demand in Europe and decreased earnings from China have exposed these problems, according to the report by Bild am Sonntag.
Last Monday, the head of Volkswagen’s works council revealed that the company intends to close at least three factories in Germany, implement significant layoffs, and downsize other facilities within Europe’s largest economy as part of a significant overhaul. While Volkswagen has not officially confirmed these plans, by Wednesday, it proposed a 10% salary reduction for its employees. The company argued that this step was essential for preserving jobs and maintaining competitiveness in the European automotive market.
Blume emphasized that the operational costs within Germany were severely impacting Volkswagen’s competitive edge and insisted that there needed to be substantial reductions in these expenses. He further explained that while the objectives for cost reductions were non-negotiable, there was flexibility regarding the methods of achieving them.
According to the paper, Volkswagen has allocated approximately 900 million euros (equivalent to $975.06 million) in its annual financial report for implementing these cost-cutting measures. The exchange rate stands at $1 equaling 0.9230 euros.
