Volkswagen is still moving deeper into a difficult phase. In the first quarter, the group once again recorded a sharp decline in reported profit, while vehicle sales failed to grow.
Volkswagen Group CEO Oliver Blume is preparing the wider “Volkswagen world” for tougher times. His message is that the company is facing stronger competition, political pressure, trade barriers, and serious internal cost challenges.
In the first three months of the year, Volkswagen earned significantly less money than before. Net profit after tax fell by 28.4% compared with the same period last year.
From January through March, the group earned about $1.7 billion. That means the negative trend is continuing, even as Blume says Volkswagen has made “visible progress.”
Sales Are Weak In China And The United States
In a statement, Blume spoke of “headwinds” caused by fierce competition. He also listed geopolitical tensions and trade barriers, including U.S. tariffs, among the reasons for the weaker results.
The larger problem is that Volkswagen is selling too few vehicles, especially in China and the United States. In the first months of the year, sales volume fell to 2.05 million vehicles, which is 4% lower than a year earlier.
Growth in Europe was not enough to offset that decline. The results were also hurt by a weak quarter from Porsche, Volkswagen’s subsidiary, while the truck business also failed to perform as expected.
Deeper Cost Cuts Now Look More Likely
The weak results will probably give management more momentum for a scenario that is becoming increasingly clear. Volkswagen is likely to tighten its cost-saving measures further.
Current plans call for 50,000 jobs to be eliminated across Volkswagen, Porsche, and Audi by 2030. Blume also wants to reduce factory capacity around the world.
Until now, Volkswagen’s plants were planned around annual production of about 12 million vehicles. The company now sees about 9 million vehicles as a more realistic level. That means factories may need to be reduced in size, restructured, or possibly closed.
Employees Face Growing Uncertainty
For many employees, the current situation creates uncertainty about the future of their factories and jobs. For now, only employees at Volkswagen AG have a clearer level of protection.
At the end of 2024, after difficult negotiations, they received a job guarantee that rules out dismissals until 2030. That means Volkswagen plants in Lower Saxony are considered secure until 2030.
There is one important exception: the Osnabrück plant. That site is not covered by the guarantee. Under current plans, the last vehicle with a VW badge will leave its production line in mid-2027, and what happens after that remains unclear.
Osnabrück Still Has No Clear Future
Employees in Osnabrück are already used to hearing new options for their plant. The most likely scenario is still some form of cooperation with, or takeover by, a company from the defense industry.
Nothing has been officially confirmed. What is clear is that major changes are being prepared across the entire group.
Management recently warned employees about this in an internal message. The statement said the business model will “radically change” and that this has to happen because, although Volkswagen’s vehicles are good, the company is not earning enough money to finance its future sustainably.
More Details Could Come By Summer
What this will mean for individual brands, factories, and jobs is still unknown. That may explain why works council chair Daniela Cavallo has not yet commented on the latest cost-saving signals.
She is likely waiting for more specific information. IG Metall has already reacted. In an internal message to employees, the union tried to explain Blume’s comments about factory utilization and reduce fears.
Its main message was that Blume is not calling for drastic cuts but that there is a “need for action.” What that means in practice, and when employees will receive more clarity, could become known in the coming weeks. According to unofficial information from within the group, more details are expected by the summer.
This article originally appeared on Autorepublika.com and has been republished with permission by Guessing Headlights. AI-assisted translation was used, followed by human editing and review.