Volkswagen's CEO Oliver Blume has confirmed the necessity of an extensive cost-cutting programme to address what he describes as "decades of structural problems" within the company.

This strategy was detailed by Blume in an interview with Bild am Sonntag, as reported by Reuters.

The German automaker is planning to implement significant cost reductions, including potential factory closures and layoffs, to enhance competitiveness and maintain sustainability.

Blume told Sunday paper Bild am Sonntag: "The weak market demand in Europe and significantly lower earnings from China reveal decades of structural problems at VW."

The head of Volkswagen's works council recently disclosed the possibility of shutting down at least three factories in Germany and reducing the workforce by tens of thousands.

While these plans have not been officially confirmed, the company has proposed a 10% wage reduction for its workers, stating it as a crucial step to preserve jobs and remain competitive.

Blume emphasised the high operational costs in Germany as a significant hindrance to Volkswagen's competitiveness.

"Our costs in Germany must be massively reduced," he added.

Blume also stated that while the goals for cost reduction are non-negotiable, the methods for achieving them can be flexible.

The car manufacturer has allocated approximately €900m in its annual report for the implementation of these measures.

As of last month, Volkswagen aims to save €4bn due to the pressing need to reduce expenses amidst tough economic conditions.

A Handelsblatt report suggests that the company's leadership is considering a range of cost-saving actions, including limiting bonuses for senior executives, cutting anniversary payments for staff, and potentially closing certain production facilities in Germany.

In September, Volkswagen Group said it is scrapping labour agreements in Germany to pave the way for job cuts at six plants in Germany.

Multiple media reports in Germany said the company gave notice to the IG Metall union of the cancellation of a range of labour agreements including one that guarantees jobs at six German plants until 2029.

"Volkswagen unveils cost-cutting measures to address structural issues" was originally created and published by Just Auto, a GlobalData owned brand.

The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.