VW cost-cutting package: Blume wants agreement by year-end

The background to the negotiations is the group's strained economic situation. In the second quarter of 2026, group-wide deliveries fell by almost 9 percent to 2.08 million vehicles. Group profit after taxes dropped by 32.9 percent to 1.54 billion euros in the months of April through June. In the second quarter of 2025, VW had still reported 2.29 billion euros in profit. Revenue also shrank slightly in the first three months of the year, by 2.5 percent.

Particularly heavy is the slump in China, the group's most important single market. There, sales plunged by more than one-third to 424,300 vehicles. Blume explained that the Chinese market had contracted by 20 percent this year, that Chinese manufacturers now held a market share of over 30 percent and were pushing into other world regions. The European market, too, had declined by 16 percent over recent years.

Background

The crisis is reflected in the balance sheets of the subsidiaries. At sports car maker Porsche AG, automotive revenue – excluding financial services – fell from 8.3 to 7.8 billion euros. At Audi, revenue declined in the second quarter from 17.1 to 15 billion euros. The group's operating return on sales thus stood at just 3.3 percent.

Job cuts and plants

Reactions to the restructuring

Suppliers and location policy

Suppliers under pressure

Against this backdrop, Blume reiterated the already announced cost-cutting course. Through 2030, Volkswagen has announced the elimination of 50,000 jobs group-wide in Germany; worldwide, the figure could reach up to 100,000 jobs. More than 37,000 employees have already signed corresponding agreements, according to the group. Blume internally spoke of a magnitude of around 50,000 jobs worldwide that would be affected as a "theoretische Ableitung." Some 35,000 jobs are to be cut at the core brand alone, with the remainder at subsidiaries such as Audi and Porsche. Up to 50,000 additional jobs are on the line, according to group information.

Talks and political resistance

Blume tried to allay concerns about plant closures. "Es ist nicht realistisch, über Werksschließungen bis 2030 zu reden," he added. "Werksschließung ist immer die letzte Option" and "Ein Werk zu schließen, ist immer die letzte Lösung," he said in interviews. "In unseren existierenden Werken insbesondere in Deutschland haben wir Modelle in der Produktion und wir brauchen diese Modelle," Blume said during a conference call. Before any closure, he said, he preferred "intelligente Lösungen," as he stated in an internal statement.

At the same time, Blume acknowledged that the production network must continue to shrink. "Wir haben ein Produktionsnetzwerk, was auf über 12 Millionen Fahrzeuge aus der Vergangenheit investiert wurde. Wir haben in den letzten Jahren bereits jeweils zwei Millionen Fahrzeuge aus dem Netz genommen und werden jetzt noch eine weitere Million aus dem System nehmen müssen," he said. Every excess capacity costs money. Back in 2024, it was agreed that from 2027 onward no Volkswagen products would be manufactured in Osnabrück.

Market environment and analyst assessments

In the fight against Chinese competition, Blume is also counting on European industrial-location policy. "Da ist besonders die Zuliefererindustrie betroffen," he warned. "Und das sind für mich Ansätze, die wir zügig angehen müssen, um dort eine Wettbewerbsgleichheit zu schaffen, die wir natürlich in anderen Weltregionen auch haben." Beyond that, there are many approaches that point "in Richtung 'Made in Europe'." Added to this are the US tariffs, which place an additional burden on business.

VDA President Hildegard Müller placed the developments in structural context: "Die Transformation zur E-Mobilität kostet Arbeitsplätze, weil der Verbrenner­motor mehr Komponenten hatte," she said. Blume himself stressed that he personally wanted to preserve every job, but at the same time acknowledged: "Ich muss unser Unternehmen im Blick haben."

Given the pressures, the group also revised its return targets. By year-end, the goal had been at least 4 percent operating return on sales, rising to at least 8 percent by 2030. VW had only walked back that target at the beginning of the year; previously, at least 9 percent had been envisaged. The cost-cutting measures agreed at the end of 2024 are no longer sufficient in light of the worsening framework conditions, Blume said.

Outlook on upcoming meetings

According to Blume's account, talks with the labor side and policymakers are proceeding intensively. "Wir haben sehr konstruktive Gespräche," he said with regard to the negotiations. "Dort gab es sehr konstruktive, aber auch kontroverse Diskussionen." However, he also conceded: "Wir haben dort noch keinen umfassenden Beschluss treffen können." With regard to potential criticism from the supervisory board, he said in a statement: "Da gehe ich schon fest davon aus, dass wir das in diesem Jahr machen müssen" – and: feared plant closures should not come to pass.

Politically, the project is under particular scrutiny from the state of Lower Saxony, which holds a 20 percent stake in VW and has two seats on the supervisory board. The Lower Saxon state government has already rejected closure plans. The workforce and IG Metall are also protesting: on July 9, 2026, the union had called a rally in Wolfsburg against the restructuring and the massive job cuts.

Internationally, analysts view the group differently. Deutsche Bank rated Volkswagen's preferred stock "Buy" on July 16, 2026; RBC Capital Markets recommended "Outperform" on July 14, 2026, while JP Morgan rated it "Neutral." The share price had already fallen sharply beforehand; market capitalization is significantly below earlier peaks.

Blume himself sees cause for confidence in the new models: "Sehr positiv sind unsere neuen Produkte. Wir haben von der New Urban Car Family über 70.000 Aufträge in den ersten Wochen eingesammelt." Moreover, the group is "in der Lage, sogar unseren Absatz in so herausfordernden Zeiten mit über 150 Wettbewerbern weiterhin außerhalb Chinas zu steigern."

The further deliberations on the supervisory board are considered decisive for the question of how deeply the group will wield the axe. Blume signaled readiness for a hard cut – while simultaneously trying, with regard to locations and employment, to calm the waters. Which plants and production lines will ultimately be affected is to be determined in the upcoming meetings through the end of 2026.

Biographically, Blume has been working in Wolfsburg since 2009: in 2009 he moved to the Volkswagen brand as head of production planning, in 2013 he took over responsibility for the Production and Logistics board division at Porsche AG; since 2018 he has been a member of the board of management of Volkswagen AG. From 2015 until the end of 2025, Blume was chairman of the board of management of Porsche AG.