Volkswagen plans to cut costs by 20% by 2028, with plant closures not ruled out, as part of an effort to reshape the company in the face of increasing competition from China, according to reports.
The German automotive company’s chief executive, Oliver Blume, and its finance chief, Arno Antlitz, are said to have presented a plan for “massive” savings at a meeting of the company’s top executives last month.
Declining sales, high costs, the rise in sales of Chinese cars in Europe and robotisation are forcing manufacturers and suppliers across the car industry in Germany to create resilience in the sector.
Volkswagen announced plans for deep restructuring across its brands and plants 18 months ago as part of an effort to save €10bn (£8.7bn), a move that was seen in Germany as “an earthquake” in one of the country’s most famous companies.
Back then it announced cuts of 35,000 to its workforce of 135,000 by 2030 after an agreement with the staff union including natural attrition through retirement and other staff departures.
At the time, Volkswagen said the job losses would save €1.5bn a year but the details on how this would be achieved remained undisclosed.
The latest, behind-closed-doors initiative is aimed at ensuring profits settle at a sustainable level in the new competitive environment, the German publication Manager Magazin reported on Monday.
Volkswagen said it was unable to comment on reports of its cost-cutting drive until its annual results are announced on 10 March. But a spokesperson said on Monday that since the restructuring programme was announced three years ago, it had “achieved savings in the double‑digit billion‑euro range”.
They added: “This has enabled the group to cushion geopolitical headwinds – such as tariffs in the United States – and stay on course.”
Where exactly the savings are to be made and where cooperation between the brands is to be improved remained unclear at the meeting, Manager Magazin said, but it reported that plant closures could also be on the table.
The further details on the restructuring came after new data showed that the EU’s trade deficit with China grew by 18% in 2025, with Europeans continuing to buy more from China than they sold.
The data from Eurostat estimated the annual EU trade deficit with China was €359.3bn, or about €1bn a day. This has fuelled concerns that the EU’s strategy, which includes tariffs on electric vehicles and formal initiatives to wean itself off critical supplies that impact industry and energy, is not having the desired impact.
The German chancellor, Friedrich Merz, is due to go to China next week, with trade high on the agenda.
Germany’s car industry is deeply embedded in China, with Volkswagen and other brands operating an extensive manufacturing base in the country though longstanding joint ventures.
Under Merz’s predecessor, Olaf Scholz, Germany voted against EU tariffs on Chinese imports, such was its concern about the impact on sales in the EU of Chinese-made German car brands.
It failed to win the argument but in a significant development last week Volkswagen secured a breakthrough tariff reprieve for one China-made brand, the Cupra Tavascan SUV. This was in exchange for agreeing to sell the car at an agreed minimum price.
China’s strategic partnerships will come under the spotlight again in April when Donald Trump is expected to visit Beijing, with all focus on de-escalation of trade wars between the two economic superpowers, referred to by the US president as “the G2”.
Volkswagen has been approached for comment.
