Volkswagen CEO Aims to Avoid Plant Closures in Cost-Cutting Push

Volkswagen CEO Oliver Blume indicated that the automaker is pursuing alternatives to plant closures as part of its strategy to improve performance and cut costs. The company faces pressure to reduce expenses, particularly amid intense competition in the Chinese market.

In comments published Sunday, Blume told the German newspaper Bild am Sonntag that "there are more intelligent solutions than closing plants." He noted that a cost-cutting program already in place in Germany is showing results, with factory costs in the country improving by an average of 20% in the past year. "We were able to improve our factory costs in Germany by an average 20% last year alone, describing that as 'strong progress,'" Blume said.

Volkswagen announced last week that its "fundamental realignment" over the past three years had entered a new phase, including plans to streamline its model lineup by as much as half. While specific details have not been provided, questions persist about other cost-reduction measures. The company is aiming to earn more profit from its popular products by continuing to reduce costs across all areas.

The automaker, based in Wolfsburg, Germany, is navigating a challenging market environment. Blume emphasized the need for continued cost reduction, stating, "We just earn too little money with them. So we must continue to reduce our costs. In all kinds of costs."