WOLFSBURG, May 6, 2026, 21:03 CEST
- Volkswagen CEO Oliver Blume is weighing the fate of four plants, as Manager Magazin reports investment spending might be slashed by roughly 30 billion euros.
- Pressure intensified following sluggish production at German plants, a slim first-quarter margin, and now a fresh tariff hit—Blume estimates the cost at 5 billion euros annually.
- VW is weighing some unconventional solutions too—defence-sector projects for certain plants, plus possible China-related manufacturing on European soil.
Volkswagen CEO Oliver Blume is preparing for a tougher chapter in the automaker’s overhaul, with Manager Magazin reporting Wednesday that up to four plants could be on the chopping block, and about 30 billion euros in investments now set for the axe. The publication added that Blume is eyeing more management cost cuts as well.
This shift hits now, as cost problems are no longer just for boardroom spreadsheets—they’re showing up on the plant floor. On Tuesday, Handelsblatt said early-2026 output forecasts have only added to the pressure at German locations already considered pricey internally. Emden and Zwickau, according to the report, are running below capacity, and the cost to build each car remains stubbornly high.
Blume on Wednesday tossed in a new figure: tariffs are hitting Volkswagen’s operating profit by 5 billion euros annually, he said at an event in Barcelona. He didn’t clarify if he meant existing tariffs or the potential increase in U.S. duties on EU cars and trucks to 25% from 15%.
Volkswagen’s overhaul targets a leaner operation by 2030. In an internal memo reported by WELT, Chief Financial Officer Arno Antlitz told staff the existing savings push falls short—VW, he said, needs a “fundamental transformation” of its business model, along with deeper structural changes. CEO Blume also weighed in, admitting the group’s vehicle profits aren’t enough to secure its long-term prospects. DIE WELT
Factory economics are front and center here. According to Merkur, which referenced Handelsblatt, the pure factory cost per vehicle in Europe has climbed past 4,000 euros—well above the 3,000-euro target. That figure, excluding materials, simply covers what it takes to assemble a vehicle inside the plant, and it’s especially crucial when production lines aren’t operating at full tilt.
Volkswagen isn’t holding back. The company is set to shed about 50,000 jobs in Germany by 2030, with 35,000 positions at its main VW brand on the line, WELT reports. Thanks to agreements with IG Metall, compulsory layoffs are off the table. Instead, most of the reductions will come from partial retirements and severance offers.
Speaking to Manager Magazin, Blume said Volkswagen is targeting another reduction in global production capacity, this time by one million vehicles. That would bring annual capacity down to roughly 9 million cars, compared to the original 12 million. The issue here is straightforward: Volkswagen has more plants and production lines than it needs for the cars it actually expects to sell.
Volkswagen’s Q1 numbers paint a clear picture. Operating profit slid 14.3% to 2.46 billion euros, with the margin narrowing to 3.3%. The company moved 6.9% fewer vehicles than a year ago. In China, sales slumped 20%; North America saw a 9% dip, according to Volkswagen.
Several of the options on the table don’t look like typical car industry moves. Last week, Reuters said Volkswagen was considering making models for China in Europe, or potentially opening up some of its European factories to Chinese partners. The automaker is also reassessing plant utilization, product range, and its broader business lineup. On Volkswagen’s earnings call, Bank of America’s Horst Schneider didn’t mince words—he cautioned that bringing Chinese partners into European plants could be “a wolf in sheep’s clothing.” Reuters
Osnabrueck is already serving as a test case. According to Reuters, Israeli defence firm Rafael Advanced Defence Systems has signed a letter of intent to acquire the plant, with the news agency citing two sources familiar with the matter. VW isn’t commenting, but Blume said the group remains in advanced discussions with defence firms regarding the site.
It’s not just VW feeling the squeeze. BMW on Wednesday posted a 25% slide in first-quarter pretax profit. Last week, Mercedes-Benz flagged a steep decline in operating profit. Both companies are wrestling with sluggish demand in China, looming U.S. tariffs, and intensifying competition as Chinese brands push further into Europe. So far, BMW hasn’t turned to layoffs—unlike Volkswagen and Mercedes, according to Reuters.
Politics and labour could easily bog down the clean-up. Lower Saxony owns 20% of VW voting rights and wields a veto on big moves, and it’s resisted plant closures. Union deals tie VW’s hands on forced layoffs. Tariffs could change again, too, leaving VW slashing capacity for one set of rules, only to have the ground shift.
