Volkswagen is progressing well with job cuts, CEO Blume says

Germany’s Volkswagen is pressing ahead with sweeping job cuts across all its brands, as the automotive giant adapts to the crisis gripping the car industry, group chief executive Oliver Blume told dpa in a recent interview.

More than 35,000 jobs are to be cut at Volkswagen’s core brand, 7,500 at Audi and around 4,000 at Porsche. Other brands and subsidiaries also face cuts.

“We are making good progress,” he said of the reorganization.

Blume, who has headed the VW Group alongside sports brand Porsche for three years, spoke of “turbulent times.”

Germany’s car industry is grappling with weak sales, growing competition from China and difficulties in the shift to electric mobility, as well as EU climate targets aimed at lowering emissions and US tariffs.

“We have to align capacities with reality,” Blume said. Sales in the European market had fallen by a fifth in the past five years, he noted. “We are gradually adjusting our capacities. For the Volkswagen brand, for example, by over 700,000 vehicles a year.”

The weak domestic market is compounded by a fierce price war in China, while Chinese manufacturers are challenging German carmakers in the European market.

High investments in the transformation to electric mobility are an added burden, as is the fact that electric vehicle (EV) sales have so far been worse than expected. Profit margins tend to be slimmer on EVs, in part due to the cost of the batteries.

“Cost control is crucial to securing a successful future for this company,” Blume said. The financial pressure is high, with profit slumping by 38% in the first half of the year.