Flat sales and declining profits have compelled the Volkswagen Group to alter its corporate strategy. The German automotive giant reported stable global deliveries at 9.0 million vehicles, yet its financial performance suffered significantly. In response, CEO Oliver Blume unveiled a comprehensive plan aimed at securing the company's future by 2030, which depends heavily on substantial workforce reductions to enable an aggressive pursuit of leadership in the global electric vehicle market.
The most drastic aspect of this plan involves cutting 50,000 jobs across the entire corporate structure. These layoffs will impact employees at major brands such as Volkswagen, Audi, and Porsche, as well as the software division CARIAD. Within Volkswagen AG alone, the company has already formalized agreements to facilitate over 28,000 employee departures by 2030. Management has confirmed that these labor adjustments and agreements have already realized approximately $1 billion in expense reduction over the past year.
A steep decline in earnings has prompted these drastic corporate changes. The group experienced a drop in operating profit from $22.38 billion to $10.43 billion. To reverse this downward trend, the company has set a firm financial objective of achieving an operating return on sales between 8% and 10% by 2030. Executives also aim for the automotive division's net cash flow to constitute more than 60% of the overall operating results by the decade's end.
To meet these financial targets, VW Group needs to generate over $7 billion in net cost savings annually by 2030. The company is already making strides at its domestic manufacturing sites, with factory expenses at German locations decreasing by an average of over 20%. Executives plan to sustain this trend by reducing excess factory capacity and aligning global production with actual regional market demands.
While the company works to trim its internal budget, demand for its electric cars remains robust. Global deliveries of battery-powered vehicles have surged by 32%. This growth is even more pronounced in Europe, where sales of electric models have jumped by 66%. This impressive performance has allowed the company to capture a 27% share of the European electric vehicle market, bolstered by having five of the ten most popular electric cars on the continent in its portfolio.
Volkswagen intends to solidify this market advantage by introducing affordable electric vehicles for a broader audience. The automaker is developing a new line of compact urban vehicles to capture the entry-level segment, including the Volkswagen ID. Polo, the Volkswagen ID. Cross, the Cupra Raval, and the Škoda Epiq, among another 20 models across its various brands that are set to launch over the next four years.
Technology and battery production are critical to this long-term corporate survival strategy. The company is manufacturing its battery cells through its PowerCo subsidiary, ramping up production in Germany and preparing to open planned factories in Spain and Canada. Digitally, the group has developed a new electrical architecture with Chinese manufacturer XPeng within just 18 months for the Asian market, and the collaboration with Rivian is set to advance software systems for Western markets.
Leadership is also tackling internal bureaucracy to reduce development costs. The vehicle manufacturer will streamline the total number of physical platforms and electronic systems utilized across its brands. Offering fewer model variants is expected to facilitate higher production volumes for each specific car, expediting vehicle engineering and reducing corporate expenditures.
Oliver Blume has articulated that the restructuring plans represent a permanent evolution of the corporate identity rather than a temporary initiative. The company has simplified management layers, placing major operations—such as development, purchasing, manufacturing, and sales—directly under the purview of the executive level. Volkswagen believes that these streamlined processes will enhance the company's resilience in an increasingly volatile global automotive market.
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