Volkswagen AG has announced plans to reduce its costs by 20% by the end of 2028 as part of a significant restructuring effort. This decision, confirmed by Manager Magazin, affects all automotive brands under the company, with CEO Oliver Blume and CFO Arno Antlitz presenting the extensive cost-cutting strategy during a leadership meeting in Berlin in mid-January. The aim of these cuts is to restore the company's profitability, which has been challenged by factors such as declining sales in China, intensified competition, and tariffs imposed by the United States.

The financial strain on Volkswagen is indicative of broader challenges faced by the automotive industry, as many manufacturers are grappling with similar issues. Over the past few years, Volkswagen has already implemented significant austerity measures that saved the company billions of euros. However, experts warn that the new round of cuts might lead the manufacturer to consider closing factories, a development that could have serious implications for jobs and local economies.

Details of the savings program are expected to be disclosed during Volkswagen's financial results announcement on March 10, according to reports from Reuters. This upcoming announcement will likely shed light on how the company plans to navigate its financial difficulties and whether such drastic measures will indeed stabilise its market position in the increasingly competitive automotive landscape.