Berlin: Volkswagen’s planned cost-cutting program is essential to address “decades of structural problems” within the German carmaker, according to CEO Oliver Blume in an interview published on Sunday.
Blume highlighted the challenges posed by weak market demand in Europe and significantly lower earnings from China, stating, “The weak market demand in Europe and significantly lower earnings from China reveal decades of structural problems at VW,” as reported by Bild am Sonntag.
The head of Volkswagen’s works council revealed last Monday that the company intends to close at least three factories in Germany, resulting in the layoff of tens of thousands of employees and the downsizing of its remaining facilities in Europe’s largest economy as part of a deeper-than-expected restructuring.
While the carmaker has not officially confirmed these plans, it has requested its employees to accept a 10% pay cut, asserting that this is the only viable strategy to save jobs and maintain competitiveness.
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Blume noted that the high cost of operations in Germany significantly hampers Volkswagen’s competitiveness, emphasizing, “Our costs in Germany must be massively reduced.” He also stated that there is no flexibility on the cost-cutting goals, only on the methods to achieve them.
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To support these measures, the company has allocated approximately 900 million euros ($975.06 million) in its annual report for implementation.
