Volkswagen chief says plant closures are not his preferred cost fix
Oliver Blume told Bild am Sonntag that Volkswagen is seeking other ways to cut costs as it works through a turnaround plan.
By Hana Yoshida · Markets Reporter
2 min read
Volkswagen CEO Oliver Blume signaled he wants to avoid shutting factories as the German automaker looks for more savings. The comments matter because Volkswagen is under pressure to improve profitability while questions persist over the future of its German plants, according to the Associated Press.
Blume told Bild am Sonntag that there are “more intelligent solutions than closing plants,” the AP reported Sunday. His remarks came as Volkswagen continues a turnaround effort focused on lowering costs and reshaping its product plans.
The Wolfsburg-based company is facing cost pressure in Germany and tougher competition in China, a key market for the automaker, according to the AP. Those strains have kept attention on how far Volkswagen may go as it tries to improve performance.
Model lineup cuts are planned
Volkswagen said last week that a “fundamental realignment” that began over the past three years had moved into a new phase, according to the AP. As part of that effort, the company announced plans to reduce its model lineup by as much as half.
Volkswagen did not give further details on which models could be affected, the AP reported. The lack of specifics has left open questions about what other steps the company may take to lower expenses.
The AP reported that speculation has returned over the future of several Volkswagen plants in Germany. Blume’s comments to Bild am Sonntag suggested he is trying to steer the company toward cost reductions that stop short of closures.
Blume points to factory savings
Blume said Volkswagen’s German cost-cutting program is already showing results, according to Bild am Sonntag as cited by the AP. He said the company improved average factory costs in Germany by 20% last year and described that as “strong progress.”
The CEO also told the newspaper that Volkswagen’s vehicles remain popular with customers, the AP reported. His concern, he said, is that the company does not make enough money from those products.
Blume said Volkswagen must keep cutting expenses across cost categories, according to the AP. He did not lay out additional measures in the comments reported Sunday.
The company’s next steps remain unclear after the model-lineup announcement. For now, Blume’s public message is that Volkswagen is seeking savings while trying to avoid the most disruptive factory decisions in its home market.
This story draws on original reporting from Fortune.