VW CEO Oliver Blume sees no alternative to a restructuring and savings program for the Volkswagen brand. The mistakes that caused the economic problems at VW were made in the past, Blume told “Bild am Sonntag”. Weak market demand in Europe and significantly lower earnings from China revealed decades-old structural problems at VW. This is now being addressed consistently.
The head of the entire group announced: “Our costs in Germany must be reduced massively.” VW is simply too expensive at home: “Our labor costs here, for example, are often more than twice as high as the average at our European locations. There is also a need for action when it comes to our development and sales costs and other cost areas compared to the competition.” VW is actually doing well: “Group sales are currently slightly higher than the previous year – our new products are well received, as evidenced by the increase in incoming orders in the third quarter.”
However, the operating result is under enormous pressure after nine months, precisely because of the high costs, and has fallen by more than 20 percent. That’s why Blume wants to implement the renovation now. “The goal for cost and capacity adjustment is set.” Only the path there can be “flexibly designed”. The group has set aside around 900 million euros as provisions in the annual report for the measures.
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**Interview with Oliver Blume, CEO of Volkswagen Group**
**Interviewer:** Thank you for joining us, Mr. Blume. Volkswagen is currently undergoing a significant restructuring. Can you explain why you believe this is necessary?
**Oliver Blume:** Thank you for having me. The restructuring is essential because we need to address the structural problems that have plagued Volkswagen for decades. Despite our current sales being slightly higher than last year, the economic landscape—especially the weak market demand in Europe and reduced earnings from China—has made it clear that we cannot continue with the status quo.
**Interviewer:** You mentioned that Volkswagen’s costs in Germany are too high. What specific areas are you targeting for cuts?
**Oliver Blume:** Yes, our labor costs in Germany are significantly higher than those at our other European locations, sometimes more than double. We also need to look closely at our development and sales costs. To be competitive, we must streamline these areas and reduce expenses across the board.
**Interviewer:** Despite these challenges, you noted that VW’s new products are well received. How do you plan to balance cost-cutting with innovation?
**Oliver Blume:** It’s a fine balance, but innovation cannot be sacrificed as we make these adjustments. We have to ensure our new products continue to meet the market demands while also being cost-effective. We aim to be flexible in how we implement these changes, ensuring that we do not compromise on quality or our commitment to sustainability.
**Interviewer:** You mentioned setting aside around 900 million euros in provisions. How will this impact employees and operations moving forward?
**Oliver Blume:** While there will certainly be challenges, we are committed to being transparent with our employees about why these steps are necessary. Our goal is to create a leaner, more efficient organization. This might involve re-evaluating roles or restructuring departments, but we are focusing on maintaining morale and ensuring that our workforce understands the path forward.
**Interviewer:** Thank you, Mr. Blume. It’s clear that Volkswagen is at a crucial juncture, and we look forward to seeing how your plans unfold.
**Oliver Blume:** Thank you for the opportunity to share our vision. We are determined to navigate this transition effectively and emerge stronger as a result.
