VW Cost-Cutting Necessary After "Decades Of Structural Problems," Says CEO

Volkswagen's planned cost-cutting program was essential to address “decades of structural problems” at the German automaker, CEO Oliver Blume said in an interview, as reported by Friederike Heine for Reuters.

Blume noted that the high cost of operating in Germany was a significant drag on Volkswagen’s competitiveness. I Photo: Volkswagen

“The weak market demand in Europe and significantly lower earnings from China reveal decades of structural issues at VW,” Blume told the paper Bild am Sonntag.

Last week, the head of Volkswagen’s works council stated that the automaker plans to close at least three factories in Germany, lay off tens of thousands of employees, and downsize its remaining plants as part of a larger-than-expected overhaul.

Volkswagen has not confirmed these plans but asked its workers to accept a 10% pay cut, arguing that this was the only way for Europe’s largest automaker to save jobs and remain competitive.

Blume noted that the high cost of operating in Germany was a significant drag on Volkswagen’s competitiveness, telling Bild am Sonntag that “our costs in Germany must be massively reduced.”

He stated there was no flexibility regarding cost-cutting goals, only in how they would be achieved.