It’s been more than half a decade since the Volkswagen Group was overtaken by Toyota as the world’s largest-selling carmaker, and now it’s facing a significant cost-cutting strategy to play to its strengths.
News agency Reuters - via a report by Germany’s Manager Magazin - reports the Volkswagen Group wants to cut 20 per cent of its costs across its plethora of brands by 2029.
This would impact not only the core Volkswagen brand but also the likes of Audi, Porsche, Seat/Cupra, and Skoda, all of which fall directly under the Group’s control.
While the Manager Magazin report didn’t include a specific figure, Spiegel suggests the savings to the Volkswagen Group could be in the region of €60 billion (A$100.6 billion).
According to Manager Magazin, it is possible the Volkswagen Group could close some plants to assist in the cost-cutting exercise, however as recently as December 2024 the car giant fought to make sure this didn’t happen.
At the time, it had battled weeks of strikes by its workforce, ultimately culminating in the Volkswagen Group announcing it would cut 35,000 jobs across its lineup by 2030.
It also announced big changes to its production network in December 2024, targeting annual medium-tern cost savings of €15 billion (A$25.1 billion).
This included moving production of the engine-powered Volkswagen Golf to Puebla, Mexico from 2027, with the new electric Golf to take its place in Wolfsburg, Germany, based on a new Scalable Systems Platform (SSP).
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The Volkswagen ID.3 and Cupra Born electric hatchbacks were also to be moved from Zwickau to Wolfsburg, with the former factory to also cease production of the ID.4, instead keeping the Audi Q4 e-tron as the only vehicle under its roof.
Volkswagen also announced at the time it would lease out its Dresden factory - better known as the Gläserne Manufaktur or Transparent Factory - to a third-party manufacturer, something which has yet to occur.
Originally built to produce the Volkswagen Phaeton, the Gläserne Manufaktur reportedly cost €186 million (A$311.8 million) to make.
It’s likely Volkswagen will have to make big changes elsewhere outside of Germany, given the tariffs it faces in the US as well as China’s increasingly competitive local market, in addition to the impact its exports are having globally.
Last year, Volkswagen was still the second-largest carmaker by volume, delivering 8.98 million vehicles, down 0.5 per cent on 2024, but representing a larger fall from the circa-10.7 million deliveries it made in 2019, its last year as the market leader.
