![\"Inside](\"https:\/\/www.europesays.com\/germany\/wp-content\/uploads\/2026\/05\/1779857009_252_0x0.jpg\")
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A VW T-ROC inside an Autostadt Delivery Tower at the Volkswagen AG headquarters in Wolfsburg, Germany. Photographer: Krisztian Bocsi\/Bloomberg<\/p>\n
\u00a9 2025 Bloomberg Finance LP<\/p>\n
Volkswagen<\/a>\u2019s promises to make serious cost cuts and tough restructuring have echoed meaninglessly through the decades, but this time the threats it faces are so powerful it might just be about to happen. <\/p>\n Volkswagen is under the kind of pressure it has never seen before. At home, Chinese manufacturers with their massive comparative efficiency advantage, particularly with electric vehicles, are winning sales<\/a> . Volkswagen has already shed about 20,000 jobs in Germany and 30,000 more are promised by 2030. A new cost savings plan is expected in May, to be presented at the annual meeting.<\/p>\n VW\u2019s mass market subsidiaries like Skoda, SEAT\/Cupra and its own name brand are reeling. And Chinese competition is reaching up into the heights of the market to challenge the likes of VW subsidiaries Audi, and financially troubled Porsche<\/a> , although Bentley and Lamborghini remain aloof, so far.<\/p>\n VW\u2019s lucrative Chinese market, which was more like a profits magic money tree for years, has collapsed. The U.S. market has also suddenly become much harder work as import tariffs build serious barriers to profits.<\/p>\n More action to close costly overcapacity?<\/p>\n Last year Volkswagen\u2019s adjusted operating profit fell 54% to \u20ac8.9 billion ($10.3 billion) for an operating margin of 2.8%. This year VW has vowed to increase this to between 4 and 5.5%. Volkswagen CEO Oliver Blume has promised more action to close costly overcapacity, and HSBC Global Investment Research, which rates Volkswagen ordinary and preference shares as \u201cbuy\u201d, likes what it sees.<\/p>\n \u201cSo far, we have only seen small steps towards a leaner, less complex organization, but management seems fully committed,\u201d HSBC said in a report.<\/p>\n Volkswagen ID.7 electric sedan. (Photo by Sean Gallup\/Getty Images)<\/p>\n Getty Images<\/p>\n At Volkswagen and in Germany generally union power is often part of corporate governance. Unions have half the seats on the VW supervisory board and with the help of politicians in its home state and shareholder Lower Saxony, a virtual veto on company policy. Over the decades many investors have kept away from Volkswagen because it was seen as a corporation existing more for workers than shareholders.<\/p>\n Despite the big challenges, HSBC sees some positives.<\/p>\n \u201cSelf-help offers a layer of defence to rising headwinds: the fundamentals for VW and most carmakers are uninspiring \u2013 volumes flat, mix burdened by rising EV penetration, (foreign exchange) headwinds, so too commodities,\u201d HSBC said.<\/p>\n VW\u2019s underlying profits should remain broadly flat<\/p>\n \u201cOn top of this Europe is seeing rising competition from Chinese (manufacturers) who see exports as an antidote to an ailing domestic market. Against this backdrop, we expect VW\u2019s underlying profits to remain broadly flat, which amongst the European (manufacturers) is a better than average result,\u201d the bank said.<\/p>\n Investment researcher Jefferies, with a \u201cbuy\u201d rating on VW, also reckoned prospects were impressive.<\/p>\n \u201cNew products at Audi, momentum of Core cost reduction and levers available to optimize Group investment spending and working capital altogether support improvements in 2026 across most key metrics. We make only modest cuts to estimates and continue to think that VW’s staying power and ability to adapt remain under-rated,\u201d Jefferies said in a report. <\/p>\n Investment bank UBS said recent speculation that VW was thinking about a \u20ac6 billion ($7 billion) cost saving plan which sought much plant consolidation in Germany didn\u2019t seem serious. UBS has a \u201cneutral\u201d rating on VW.<\/p>\n \u201cWe think a more radical footprint reduction in Germany won\u2019t be part of the plan. Therefore, we believe bigger restructuring charges for VW brand are unlikely at this point,\u201d UBS said, adding it wasn\u2019t confident in the 4 to 5.5% operating margin target for 2026. <\/p>\n HSBC, with its \u201cbuy\u201d rating said VW\u2019s recovery was just beginning, with much progress made. <\/p>\n Benefits are coming through<\/p>\n \u201cWhile some of the initiatives appear long dated, we have started to see the benefits coming through. There are signs that overheads are coming down, but more needs to come. We are equally keen to see what benefits there might be from reduced complexity,\u201d HSBC said. <\/p>\n With this perfect storm of problems, investors are wondering if VW really is on course to becoming leaner, less complex and freed from political influence. How many union representatives are on the board of BYD<\/a> or Geel<\/a>y? Bet on the cynics winning this argument.<\/p>\n","protected":false},"excerpt":{"rendered":"A VW T-ROC inside an Autostadt Delivery Tower at the Volkswagen AG headquarters in Wolfsburg, Germany. 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